Question

Problem 28

Answer 1

Introduction

Short Run Aggregate Supply is a curve that shows the total output of goods and services that a firm would be able to sell at a given price level on assumption that the price of all inputs remains the same. It was the term coined by J.M Keynes in 1930 on assuming when an economy is working far below then its potential level. The Shift of the SRAS curve to the right results in greater real GDP and downward pressure on price level if aggregate demand remains unchanged.