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प्रश्न
Answer in detail.
What is Aggregate Supply? Explain the determinants of Aggregate Supply.
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उत्तर
Aggregate supply indicates the total amount of goods and services produced within an economy at a given the general (or overall) price level during an accounting period. The aggregate supply function is represented as follows.
`AS = f(barN,barL,barK,barT)`
where,
AS = Aggregate supply
N = Natural resources
L = Labour
K = Stock of capital
T = State of technology
i. Natural resources: Natural resources include the gifts of nature like fertile land, weather conditions, adequate rainfall, flora and fauna, perennial rivers etc. All these factors act in favour of production. The aggregate supply of a country bestowed with these natural resources will be higher than the one with lower availability of natural resources.
ii. Labour: Availability of skilled and motivated labour is another determinant of supply. Highly skilled, efficient and productive labour force is better able to contribute to the production process. In this regard availability of skilled labour has a positive affect on the aggregate supply.
iii. Capital: Capital is essential in the production process. Capital helps in acquiring raw materials, equipments, plant and machinery, buildings etc which are essential for increasing the production and productivity. However, the accumulation of capital in an economy depends on the level of saving and investment. The greater the level of saving and investment, greater is the capital accumulation, thereby, greater is the impact on aggregate supply.
iv. State of technology: The state of technology greatly affects the level of production and supply in the economy. Modern and advanced technology helps in icreasing the productivity and production, while lowering the cost of production. While on one hand, it helps in better utilisation of the existing resources, on the other hand, it helps in exploring new and better resources. In this manner availability of modern and advanced technology has a positive impact on the aggregate supply.
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संबंधित प्रश्न
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What is Aggregate demand ? Explain the determinants of Aggregate demand.
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Income earned from foreign investment is considered for aggregate demand.
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Fill in the blank with appropriate alternatives given below
That part of income, which is not spent on consumption, is called __________.
Match the following Group:
| Group A | Group B | ||
| 1) | Aggregate Supply | a) | Expected receipts |
| 2) | Autonomous Investment | b) | Lord J. M. Keynes |
| 3) | Consumption | c) | Government Investment |
| 4) | A.P.C. | d) | ΔC/ΔY |
| 5) | Investment | e) | C/Y |
| f) | Addition to stock of capital | ||
| g) | Destruction of utility | ||
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The equality between aggregate demand and aggregate supply determines the equilibrium level of employment.
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Aggregate Demand
Define or Explain the following concept:
Aggregate Supply
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Aggregate demand is a positive function of the level of employment and output.
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Answer in detail.
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Answer the following question.
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| Column A | Column B |
| (1) Y = AD | (a) Level of output at full employment |
| (2) Forward Multiplier | (b) Withdrawal of investment decreases income |
| (3) Paradox of Thrift | (c) People save less or same as before |
| (4) Multiplier (k) < 1 | (d) 0 < MPC < 1 |
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