Aggregate Supply

Dictionary Says

Definition of 'Aggregate Supply'

The total supply of goods and services produced within an economy at a given overall price level in a given time period. It is represented by the aggregate-supply curve, which describes the relationship between price levels and the quantity of output that firms are willing to provide. Normally, there is a positive relationship between aggregate supply and the price level. Rising prices are usually signals for businesses to expand production to meet a higher level of aggregate demand. 

Also known as "total output". 
Investopedia Says

Investopedia explains 'Aggregate Supply'

A shift in aggregate supply can be attributed to a number of variables. These include changes in the size and quality of labor, technological innovations, increase in wages, increase in production costs, changes in producer taxes and subsidies, and changes in inflation. In the short run, aggregate supply responds to higher demand (and prices) by bringing more inputs into the production process and increasing utilization of current inputs. In the long run, however, aggregate supply is not affected by the price level and is driven only by improvements in productivity and efficiency.

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Aggregate Demand

    The total amount ...
  2. Supply Shock

    An unexpected ...
  3. Real Gross Domestic Product (GDP)

    An ...
  4. Cost-Push Inflation

    A phenomenon in ...
  5. Demand-Pull Inflation

    A term used in ...
  6. Change In Supply

    A term used in ...
  7. Consumer Price Index - CPI

    A measure that ...
  8. Producer Price Index - PPI

    A family of ...
  9. Supply

    A fundamental ...
  10. Elastic

    A situation in ...

Articles Of Interest

  1. Economics Basics

    Learn economics principles such as the relationship of supply and demand, elasticity, utility, and more!
  2. Why You Can't Influence Gas Prices

    Don't believe the water-cooler talk. Big oil companies aren't to blame for high prices.
  3. Explaining The World Through Macroeconomic Analysis

    From unemployment and inflation to government policy, learn what macroeconomics measures and how it affects everyone.
  4. All About Inflation

    What causes inflation? How does it affect your investments and standard of living? This tutorial has the answers.
  5. Cost-Push Inflation Versus Demand-Pull Inflation

    Gain a deeper understanding of aggregate supply and demand, forces which raise the price of goods and services.
  6. A Primer On Reserve Currencies

    For nearly a century, the U.S. dollar has served as the world's premier reserve currency, but the future is uncertain.
  7. Derivatives 101

    Learn how to use this type of investment as an alternative way to participate in the market.
  8. Okun's Law: Economic Growth And Unemployment

    Learn about Okun's Law, why it is important and how it stood the test of time since first being published.
  9. How Debt Limits A Country's Options

    While debt is fundamentally necessary to the operation of a national government, it can also be limiting and dangerous.
  10. The Link Between The Fed, Money, Debt And Taxes

    Assets on the Fed's balance sheet, money supply level, national debt level and economic production should be maintained in equilibrium.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center