Aggregate supply, also known as total output, represents the total amount of goods and services that firms in a national economy are willing to sell during a specific time period at different price levels.
The Aggregate Supply (AS) Curve represents the total quantity of goods and services that firms in an economy are willing and able to produce at each price level within a given range of prices. Illustrated on a graph, the curve typically slopes upward, indicating that higher price levels generally encourage firms to increase production.
Demand-pull inflation occurs when the aggregate demand in an economy outpaces the aggregate supply, leading to an increase in the general price level.
An inflationary gap occurs when aggregate demand exceeds aggregate supply, causing price increases in a fully employed economy or production increases if the economy is not at full employment. This phenomenon is often attributed to government deficits and excess spending.
Macroeconomic equilibrium is the point at which total aggregate income, or Gross Domestic Product (GDP), is produced when expected demand and supply are equated. This level of income consists of the planned spending of consumers, businesses, and government.
The amount of a good or service that will be brought to market at a given price. The schedule of quantities supplied at each market price defines the Aggregate Supply Curve.
