Aggregate Supply Curve
The aggregate supply curve is a graphical representation of the relationship between the quantity of goods and services that businesses are willing to supply and the price level of those goods and services. It is used to measure the total output of an economy at different price levels. The aggregate supply curve is a key component of macroeconomic analysis, as it helps to explain the behavior of prices and output in the economy.
History of the Aggregate Supply Curve
The aggregate supply curve was first developed by British economist John Maynard Keynes in the 1930s. Keynes argued that the aggregate supply curve was a function of the level of aggregate demand in the economy. He argued that when aggregate demand was high, businesses would be willing to produce more goods and services, and thus the aggregate supply curve would shift to the right. Conversely, when aggregate demand was low, businesses would be less willing to produce goods and services, and thus the aggregate supply curve would shift to the left.
Comparison of Aggregate Supply Curve
| Price Level | Quantity of Goods and Services Supplied |
|---|---|
| Low | High |
| High | Low |
Summary
The aggregate supply curve is an important tool for macroeconomic analysis, as it helps to explain the behavior of prices and output in the economy. It is a graphical representation of the relationship between the quantity of goods and services that businesses are willing to supply and the price level of those goods and services. For more information about the aggregate supply curve, please visit the websites of the Federal Reserve Bank of St. Louis, the International Monetary Fund, and the World Bank.
See Also
- Aggregate Demand Curve
- Macroeconomic Analysis
- Price Level
- Output
- Keynesian Economics
- Monetary Policy
- Fiscal Policy
- Inflation
- Deflation
- Gross Domestic Product
