•Aggregate supply is the total quantity of output firms will produce and sell—in other words, the real GDP.
•The upward-sloping aggregate supply curve—als… See more

To understand and use a macroeconomic model, we first need to understand how the … See more

Firms make decisions about what quantity to supply based on the profits they expect to earn. Profits, in turn, are also determined by the price of the outputs the firm sells and by the pric… See more

If you look at our example graph above, you'll see that the slope of the AS curve changes from nearly flat at its far left to nearly vertical at its far right. At the far left of the aggr… See more

The aggregate supply curve is typically drawn to cross the potential GDP line. This shape may seem puzzling—How can an economy produce at an output level which is higher th… See more