Aggregate Supply

Question 1

What factors will cause a change in the level of a supply curve?

Answer 1

1. Resource availability
2. Resource cost
3. Technological advances
4. But NOT the Price of the item supplied, which causes a movement along a given Supply Curve

Question 2

Define “aggregate supply”.

Answer 2

Total output of goods and services at different price levels at the macroeconomic (economy) level

Question 3

What is the slope of a Conventional aggregate supply curve?

Answer 3

It is a continuously positive slope, with steeper slope beginning at the level of full employment; supply increases with price, but requires proportionately higher prices at full employment.

Question 4

What is the slope of a Keynesian aggregate supply curve?

Answer 4

It is horizontal up to the level of output at full employment, then slopes upward to the right; supply increases with not change in thrice until the economy is at full employment.

Question 5

What is the slope of a Classical aggregate supply curve?

Answer 5

It is completely vertical; supply remains unchanged at various price levels.