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Aggregate Supply (SRAS) Curve

Definition

The aggregate supply (SRAS) curve represents the total amount of goods and services that all firms in an economy are willing and able to produce at different price levels. It shows the relationship between the overall level of prices in the economy and the quantity of real GDP supplied.

Analogy

Think of the aggregate supply curve as a roller coaster track. Just like how a roller coaster's track determines how high or low it can go, the SRAS curve shows us how much output an economy can produce at various price levels.

Related terms

Long-run Aggregate Supply (LRAS): The LRAS curve represents the maximum level of output an economy can sustain over time when all resources are fully employed.

Short-run: Refers to a period during which some factors in production are fixed, limiting a firm's ability to increase its output.

Aggregate Demand (AD) Curve: The AD curve shows the total demand for goods and services in an economy at different price levels. It illustrates the relationship between overall prices and quantity demanded.