Heildarframboð

Heildarframboð refers to the total supply of goods and services that producers in an economy are willing and able to sell at a given price level during a specific period. It is a fundamental concept in macroeconomics, representing the aggregate output of an economy. Heildarframboð is typically depicted as an upward-sloping curve on a price-output diagram, indicating that a higher price level generally incentivizes firms to produce more. This relationship can be influenced by various factors, including the cost of inputs, technological advancements, and government regulations.

In the short run, the heildarframboð curve is often considered upward-sloping because some input prices, such as wages, may be sticky and do not adjust immediately to changes in the overall price level. This means that as prices rise, firms can increase their output profitably in the short term. However, in the long run, all input prices are assumed to be fully flexible. Consequently, the long-run heildarframboð curve is typically represented as a vertical line at the economy's potential output level. This vertical position signifies that in the long run, the economy's production capacity is determined by its resources, technology, and labor force, and is independent of the price level. Shifts in the heildarframboð curve occur due to changes in factors affecting production costs or capacity, such as natural disasters, changes in raw material prices, or significant technological innovations.