Explain the difference between a change in the quantity supplied of Real GDP and a change in short-run.....?

Question

....aggregate supply?

Please give details.

Answer 1

The main difference is that in short-run AS is not so steep ans long-run AS, due to available reserves firms may supply additional quantities of goods/services to get higher profits by working close to/above potential level of production - but in long-run reserves are depleted and high-profits are offset.

So equilibrium GDP in short-run may fluctuate as reaction of changes in profit-motives due to higher demand - this means moving along short-run AS.

But shifts in short-run AS may happen due to changes in production costs (supply shocks) , availability of resources or technological achievements. Sometimes fiscal policy also have some effect to shifts in short-run AS.

Answer 2

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