Aggregate Supply Function meaning and components.

1.	Aggregate Supply Function meaning and components.
Answer» Aggregate supply function is an increasing function of the level of employment. Aggregate supply refers to the value of total output of goods and services produced in an economy in a year. In other words, aggregate supply is equal to the value of national product, i.e., national income. The components of aggregate supply are: 1. Aggregate (desired) consumption expenditure (C) 2. Aggregate (desired) private savings (S) 3. Net tax payments (T) (Total tax payment to be received by the government minus transfer payments, subsidy and interest payments to be incurred by the government) and 4. Personal (desired) transfer payments to the foreigners (Rf) (e.g. Donations to international relief efforts)

Answer»

Aggregate supply function is an increasing function of the level of employment. Aggregate supply refers to the value of total output of goods and services produced in an economy in a year. In other words, aggregate supply is equal to the value of national product, i.e., national income.

The components of aggregate supply are:

1. Aggregate (desired) consumption expenditure (C)

2. Aggregate (desired) private savings (S)

3. Net tax payments (T) (Total tax payment to be received by the government minus transfer payments, subsidy and interest payments to be incurred by the government) and

4. Personal (desired) transfer payments to the foreigners (Rf) (e.g. Donations to international relief efforts)

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