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Short Run Aggregate Supply definitions

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  • Short Run Aggregate Supply
    An upward-sloping curve showing the relationship between price levels and real GDP produced in the economy over a limited period.
  • ADAS Model
    A framework combining aggregate demand and aggregate supply to analyze overall economic output and price levels.
  • Real GDP
    The total value of goods and services produced, adjusted for inflation, reflecting actual output rather than price changes.
  • Price Level
    A measure representing the average prices of all goods and services within an economy at a given time.
  • Sticky Wage Theory
    A concept where wages remain fixed as prices rise, increasing profits and encouraging higher production.
  • Sticky Price Theory
    A concept where some prices remain unchanged due to costs of adjustment, resulting in increased sales and output.
  • Menu Costs
    Expenses businesses face when changing prices, such as printing new menus, which can discourage frequent price adjustments.
  • Union Wages
    Salaries set by labor contracts, typically fixed for several years, contributing to wage rigidity during economic changes.
  • Profit
    The financial gain realized when selling prices rise while production costs, like wages, remain stable.
  • Misperceptions Theory
    A concept where firms mistakenly interpret rising prices as increased demand, prompting higher output.
  • Market Equilibrium
    A state where aggregate supply and aggregate demand intersect, determining the economy's output and price level.
  • Price Elasticity of Supply
    A measure of how responsive the quantity supplied is to changes in price levels within the economy.
  • Factors of Production
    Resources such as labor and capital that determine the economy's capacity to produce goods and services.