SRAS
Definition
SRAS stands for short-run aggregate supply. It represents the total amount of goods and services that all firms in an economy are willing and able to produce at different price levels during a specific time period when some input prices remain fixed.
Analogy
Think about a pizza place where they have limited staff working on making pizzas. The short-run aggregate supply is like how many pizzas they can make within a certain time frame using their current resources without hiring additional staff.
Related terms
Sticky wages: Wages that do not adjust immediately to changes in economic conditions, causing firms' production costs to be temporarily higher or lower than expected.
Supply shock: An unexpected event that affects production costs or resource availability, leading to shifts in short-run aggregate supply.
Business cycle: Fluctuations in economic activity characterized by periods of expansion (increased output) and contraction (decreased output).
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