Short-run Aggregate Supply Curve
The short-run aggregate supply curve (SRAS) is a graphical representation of the relationship between the price level of goods and services and the quantity of those goods and services that firms are willing to supply in a given period of time. The SRAS curve is used to illustrate the short-run behavior of firms in the economy. It shows how the quantity of goods and services supplied by firms changes as the price level changes. The SRAS curve is typically upward sloping, meaning that as the price level increases, firms are willing to supply more goods and services.
History of the Term
The concept of the short-run aggregate supply curve was first developed by John Maynard Keynes in his 1936 book, The General Theory of Employment, Interest and Money. Keynes argued that in the short-run, firms are more likely to respond to changes in the price level than to changes in the level of output. This means that in the short-run, firms are more likely to adjust their prices in response to changes in the price level than to changes in the level of output. This is the basis for the upward sloping SRAS curve.
Comparison Table
| Price Level | Quantity Supplied |
|---|---|
| Low | Low |
| Medium | Medium |
| High | High |
Summary
The short-run aggregate supply curve (SRAS) is a graphical representation of the relationship between the price level of goods and services and the quantity of those goods and services that firms are willing to supply in a given period of time. The SRAS curve is typically upward sloping, meaning that as the price level increases, firms are willing to supply more goods and services. The concept of the short-run aggregate supply curve was first developed by John Maynard Keynes in his 1936 book, The General Theory of Employment, Interest and Money. For more information about the SRAS curve, please visit the websites of the Federal Reserve Bank of St. Louis, the International Monetary Fund, and the World Bank.
See Also
- Long-run Aggregate Supply Curve
- Aggregate Demand Curve
- Price Level
- Quantity Supplied
- Inflation
- Deflation
- Monetary Policy
- Fiscal Policy
- Keynesian Economics
- Supply and Demand
