The short-run aggregate supply curve implies that real output exceeds its long-run level when the price level is:

The short run aggregate supply curve shows graphically that the real output is more than its long run level when the price level is more than expected price level. When there is great expectation about inflation it shifts the short run Aggregate Supply curve outwards or to the right. Price level would then rise in the long run but real output would stay the same or unchanged.

chilljain33 chilljain33 · Answer 2 · 2021-12-18T10:56:55+01:00

When the price is greater than the expected price level a short run aggregate supply is implicated by the curve. In the short term the prices will go higher as in the longer run better tools can be employed for sales.

Sales will be much faster as compared to when the prices were lower as supply in the market is enough to meet the short term needs of the market only.

The short term aggregate supply leads to higher, faster and effortlessly easier sales. In this practice man hours available are increased and over utilized in the short term and hence the prices are increased.

The more time employed by workers will compensate positively as goods will be sold at higher prices. The capital, manpower, labor, building and employers are increased as a result of increased sales.

As the sources are significantly increased the quantity/units or the number of goods produced in the short term also increases ultimately and significantly.

Hence, the short term aggregate supply is implies that the real output is exceeded as compared to its long term level when the prices are greater than the expected price levels in the long run.

To know more about supply, the link below can be helpful.

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