Edexcel A Level Economics A:复习笔记2.3.1 Characteristics of AS

The Aggregate Supply (AS) Curve

  • Aggregate supply is the total supply of goods/services produced within an economy at a specific price level at a given time

2-3-1-aggregate-supply

A diagram showing the upward sloping short run aggregate supply (SRAS) curve for an economy

 

  • The AS curve is upward sloping due to two reasons
    • The aggregate supply is the combined supply of all individual supply curves in an economy which are also upward sloping
    • As real output increases, firms have to spend more to increase production e.g. wage bills will increase
      • Increased costs result in higher average prices

A Movement Along the SRAS Curve

  • Whenever there is a change in the average price level (AP) in an economy, there is a movement along the short run aggregate supply (SRAS) curve

77ro3X16_2-3-1-aggregate-supply---movement-along-sras

A diagram showing an increase and decrease in the average price level (AP) which causes a movement along the short run aggregate supply (SRAS) curve leading to a contraction/expansion of SRAS

 

Diagram Analysis

  • An increase in the AP (ceteris paribus) from AP1 → AP2 leads to a movement along the SRAS curve from A → B
    • There is an expansion of real GDP from Y1 → Y2
  • A decrease in the AP (ceteris paribus) from AP1 → AP3 leads to a movement along the SRAS curve from A → C
    • There is a contraction of real GDP (output) from Y1→Y3

A Shift of the Entire SRAS Curve

  • Whenever there is a change in the conditions of supply in an economy (e.g. costs of production or productivity changes), there is a shift of the entire SRAS curve

2-3-1-aggregate-supply---shift-in-sras

A diagram showing a shift in the entire short run aggregate supply (SRAS) curve due to a change in one of the conditions of supply in an economy

 

Diagram Analysis

  • A decrease in costs or increase in productivity results in a shift right of the entire curve from SRAS1 → SRAS2
    • At every price level, output and real GDP has increased from Y1 → Y2
  • An increase in costs or decrease in productivity results in a shift left of the entire curve from SRAS1 → SRAS3
    • At every price level, output and real GDP has decreased from Y1 → Y3

The Relationship Between Short-run & Long-run AS

  • Short run aggregate supply (SRAS) is influenced by changes in the costs of production or productivity
    • Short run refers to the time period where at least one factor of production is fixed
  • Long run aggregate supply (LRAS) is influenced by a change in the productive capacity of the economy
    • Productive capacity is changed by changes to the quantity or quality of the factors of production
      • When production capacity changes, it is equivalent to a shift inwards/outwards of the production possibilities frontier (PPF)
  • Long term economic growth requires the productive capacity to increase

 

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