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Economics - Essay Example

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Summary
Use Examples of the UK and Other Countries to Help Illustrate these Factors. 3
a) Define Aggregate Supply and, using a diagram, explain three Factors…
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Economics

Download file to see previous pages... According to an academic understanding, term aggregate is recognised on the basis of demand and supply which include Aggregate Demand (AD) and Aggregate Supply (AS) (Gwartney & et. al., 2012). In this essay, the discussion highly focuses on the concept of Aggregate Supply (AS). The discussion also incorporates an analysis of three key factors that might cause the AS curve to shift using appropriate graphical illustrations. Additionally, the discussion includes the example of the UK in terms of analysing the major influencing factors on the country’s aggregate supply portfolios.
The concept of Aggregate Supply (AS) in economics principally represents the existing relationship among the price and the quantity level with the total amount of goods or services supplied. In general, the concept of AS refers to the overall supply of commodities and services produced within a particular nation (Mankiw, 2014).
The changes in the AS curve are generally influenced by a number of factors of a particular nation. However, the change in the AS curve shift is primarily influenced by three key factors that include economic growth, change in input price and substitution effect of goods/services of that particular country.
The positive growth rate in an economy is resulted by the increase in productive resources including labour and capital of a country. The availability of abundant labour and/or capital resources helps to produce extensive numbers of final goods and/or services as well as provide support to increase the annual GDP growth rates. In this regard, a positive growth rate of economy of a country is represented by a shift towards the right of the AS curve. On the other hand, the lower growth rate of economy represents shift towards the left side of the AS curve (Mankiw, 2014).
In relation to the current economic performance of the UK, the country has been witnessing unabated fluctuation ...Download file to see next pagesRead More
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