2.3.1 The charateristics of AS

• Aggregate supply


  The quantity of real GDP which is supplied at difference price levels in the economy
• AS curve


  • Upward sloping because at a higher price level, producers are willing to supply more because they can earn more profits
• Short run aggregate supply curve (SRAS)

  Covers the period immediately after a change in the price level, shows the planned output of an economy when prices change, whilst the cost of production and productivity of the factor inputs are kept constant
• SRAS


  • Upward sloping because supply is assumed to be responsive to a change in AD, which is reflected in the price level
• Long run aggregate supply curve (LRAS)


  Shows the potential supply of an economy in the long run, when prices, and the costs and productivity of factor inputs, can change
• LRAS


  • Vertical, because supply is assumed not to change as the price level changes
• LRAS


  Similarly to the PPF, it can show the economy's productive potential