What do you mean by aggregate supply?
Answers
Answer:
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Answer:
Explanation:
The term Aggregate supply refers to the total supply of goods and services which is being produced within an economy at a specified overall price in a particular period. It is also known as total outlay.
A rise in prices of a product provides a hint to the businesses to ramp up their production to meet the higher demand. The consumer tends to compete to buy the product when there is a high demand of it amid constant supply ultimately ending up paying higher prices.
This motivates the businesses to firm up their output in order to sell more goods. The increase in supply helps in normalizing the prices and keep the output at higher levels.
There are various reasons for a shift in aggregate supply of any good. This includes many variables factors like changes in the size of manpower and its quality, increase in wages, technological upgradation and innovations, rise in the cost of production inflation, subsidies and also changes in taxes of the producer.
Hope this helps.