<p>Aggregate supply is the total supply of goods and services in an economy given the price level, over a period of time. So, according to this your first statement is correct.</p>

<p>The second statement emphasized on the potential output when <strong>all factors of production are fully utilized</strong>. It is a long term statement because only in the long run does an economy fully utilizes all the resources.</p>

<p>Here, second is a particular case of the general aggregate supply function definition.</p>

CC BY-SA 3.0
2015-10-18T17:27:41.077Z
2015-10-18T17:27:41.077Z
S.Gupta
<p>I have researched two seemingly contradictory definitions for Aggregate Supply, and I don't know how to reconcile them:</p>

<ol>
<li>The total level of income in an economy over a given period of time.</li>
</ol>

<p>or</p>

<ol start="2">
<li>The total productive capacity of an economy, i.e the potential output when all factors of production are fully utilised.</li>
</ol>

<p>How can these both be true?</p>

<gdp>
How can Aggregate Supply = National Income
Jason Chami
# How can Aggregate Supply = National Income

(Asked by: username_0 on 2015-10-17)

I have researched two seemingly contradictory definitions for Aggregate Supply, and I don't know how to reconcile them:

1. The total level of income in an economy over a given period of time.

or

2. The total productive capacity of an economy, i.e the potential output when all factors of production are fully utilised.

How can these both be true?

**Tags:** gdp

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## 1 answers

### Answer by username_1 on 2015-10-18. Score: 1

Aggregate supply is the total supply of goods and services in an economy given the price level, over a period of time. So, according to this your first statement is correct.

The second statement emphasized on the potential output when **all factors of production are fully utilized**. It is a long term statement because only in the long run does an economy fully utilizes all the resources.

Here, second is a particular case of the general aggregate supply function definition.


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