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Solution - What is Aggregate Supply? - Concept of Aggregate Demand and Aggregate Supply

Question

What is aggregate supply? 

Solution

Meaning:-

It is the total output of goods and services produced and supplied in the economy during a given period of time. It is an important element of macroeconomic analysis. Aggregate supply depends on the availability and use of factors of production like natural resources (N), Labour (L), Capital (K), and the state of technology (T).

Defition:-

According to J.M Keynes “Aggregate supply refers to the total quantity of goods and services which can be produced with available factors of production, i.e., land, labour, capital, and organisation”.

Thus aggregate supply = f (N, L, K, T)

N = Natural resources             (which is considered to be constant)

L = Stock of Capital  (which is considered variable)

K = Supply of labour              (which is considered to be constant)

T = State of Technology         (which is considered to be constant)

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APPEARS IN

2015-2016 (March)
Question 6.4 | 8 marks (combined)
Solution for question: What is Aggregate Supply? concept: Concept of Aggregate Demand and Aggregate Supply. For the courses HSC Arts, HSC Commerce, HSC Commerce (Marketing and Salesmanship), HSC Science (Computer Science), HSC Science (Electronics), HSC Science (General)
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