Aggregate Supply
Plain definition
The total quantity of goods and services that all producers in an economy are willing and able to supply at each overall price level, holding other factors constant.
In economics
In macroeconomics, the aggregate supply curve relates the aggregate price level to real GDP. The short-run curve slopes upward because wages and some input prices are sticky, while the long-run curve is vertical at potential GDP, since only technology, resources, and institutions determine long-run output.
Example
When oil prices spike, production costs rise across the economy. Producers supply less output at every price level, so the short-run aggregate supply curve shifts left, producing stagflation: higher prices with lower output.
Aggregate supply is often confused with aggregate demand, but they describe opposite sides of the market. Supply reflects production costs and capacity; demand reflects total spending. A shock to one (e.g., input prices vs. consumer confidence) has very different policy implications.