Discuss:
The short-run aggregate supply curve is considered the supply schedule of the economy only in the short-run. The short-run is the period that begins immediately after an increase in the price level and that ends when input prices have increased in the same proportion to the increase in the price level. The long-run aggregate supply curve describes the economy's supply schedule in the long-run. The long-run is defined as the period when input prices have completely adjusted to changes in the price level of final goods. There are two main factors that cause the aggregate supply curve to shift: economic growth and change in input prices. For example: Positive economic growth, labor and capital, increases GDP which will result in a shift to the right on the curve. A negative economic growth will decrease the level of GDP and result in a shirt to the left on the curve. With your own business, the supply curve is demonstrated through the goods and services that you plan on selling during a specific time period at a given price level.