Page 5 - Home Assignment- AD and related concepts
P. 5
Aggregate Supply:- It refers to money value of all the final goods and services
that all the producers are willing to supply in an economy in a given time
period.
Aggregate supply is otherwise known as national income of the country.
The components of aggregate supply are consumption and savings. Therefore,
aggregate supply function is the sum total of consumption function and saving.
= + =
Where C, S and Y represents consumption, savings and national income.
Y C S= Y-C AS=C + S
0 50 -50 0
100 100 0 100
200 10 50 200
300 200 100 300
400 250 150 400
500 300 200 500
AS=C + S
600
y = c+s
500
400
300
200
100
0
0 100 200 300 400 500 600
in the above diagram it is noticed that the aggregate supply curve slopes
0
upward and shoots from the origin making an angle of 45 at the origin,
because every point on it represents horizontal distance =vertical distance from
the origin.
