ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The aggregate supply curve shows the relationship between the aggregate price level and the quantity of aggregate output supplied in the economy. Sticky wages are nominal wages that are slow to fall even in the face of high unemployment and slow to rise even in the face of labor shortages.

Detailed explanation-2: -The relationship between the price level and the quantity of real GDP supplied, holding all other determinants of quantity supplied constant, is called the economy’s aggregate supply curve.

Detailed explanation-3: -This is a negative relationship, meaning that as the price level increases, the quantity of aggregate output demanded decreases and vice versa. The AD curve is a downward-sloping curve for this reason.

Detailed explanation-4: -Aggregate supply is the total quantity of output firms will produce and sell-in other words, the real GDP. The upward-sloping aggregate supply curve-also known as the short run aggregate supply curve-shows the positive relationship between price level and real GDP in the short run.

Detailed explanation-5: -Short-run aggregate supply curves illustrate supply in the near future or over a period in which capital is fixed. Long-run aggregate supply curves show supply in the long-term in which all inputs are variable. Aggregate supply is a function of total production within an economy and the price level.