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Key Terms capital: It is possible for the curve to shift outward in the short-run, which results in increased output and real GDP at a given price.
Elasticity of Supply: In the short-run, the production can be increased without much diminishing returns. This can be seen in the following example:.
Have suggestions for improvements? In the short-run the aggregate supply curve is upward sloping.
TFP otal Factor Productivity. In the short-run, the nominal wage rate is fixed. However, in the long run, the nominal wage rate varies with economic conditions high unemployment leads to falling nominal wages — and vice-versa. Many private firms such as those in construction, IT and pharmaceuticals, rely on contracts to supply to the public sector.
This graph shows the Aggregate Suppy-Aggregate Demand model. Poor management cited as a key supply-side weakness for the UK 11th December 2018. Aggregate Supply Curve: In the long-run, there is exactly one quantity that will be supplied.
Moving from Short-Run to Long-Run In the short-run, the price level of the economy is sticky or fixed; in the long-run, the price level for the economy is completely flexible. In the long-run only capital, labor, and technology impact the aggregate supply curve because at this point everything in the economy is assumed to be used optimally.
Economics Reference library. Based on this we can derive a simple AS supply schedule, as shown below: