Aggregate Supply Definition

Definition: In macroeconomics, it is the total supply of goods and services that the firms are willing to sell at a given price level in a given period of the economy. In the short run, aggregate supply shows total planned output when prices in the economy can change but the prices and productivity of all factor inputs are held constant. In the long run, it shows a constant level of real GDP at all price levels, determined by the economy’s productive capacity at full employment.