Compare and contrast the short-run aggregate supply (SRAS) curve and the long-run aggregate supply (LRAS) curve. What elements do they have in common? What elements differ between them?

What will be an ideal response?

Both the SRAS curve and the LRAS curve show the graphical relationship between the total quantity of final goods and services that suppliers are willing and able to produce in an economy (i.e., the real GDP) and the overall price level. Along the SRAS curve, output prices can change, but input prices are unable to adjust. Along the LRAS curve both output prices and input prices can fully adjust to economic changes. In other words, the LRAS curve is insensitive to the price level. A change in the price level does not change the amount of real GDP supplied in the long run. The SRAS curve is positively sloped because producers are willing and able to supply more real output at a higher price level than at a lower price level, ceteris paribus. The LRAS curve is perfectly vertical and positioned at the natural rate of unemployment (i.e., potential output).