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Questions
What is aggregate supply?
What is AS?
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Solution
Aggregate supply represents the total value of goods and services produced within an economy over the course of a year. In simple terms, it is equivalent to the national product, which is also known as national income. Since the national product is distributed to individuals in the form of factor incomes, aggregate supply can also be understood as the sum of all factor incomes in the economy.
Aggregate Supply = National Product = Total Factor Incomes.
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