# Aggregate Supply

*Macro & Economy — Finicade finance glossary*

Aggregate supply is what an economy can produce at each price level, constrained by labour, capital and technology. The distinction that matters for policy is short-run versus long-run: demand stimulus can raise output when factories are idle, but once the economy is at capacity it only raises prices. Supply shocks — an oil embargo, a pandemic disrupting shipping — cause the stagflation that demand-side tools cannot fix.

**Also known as:** AS, supply side

**Related terms:** [Aggregate Demand](https://finicade.com/glossary/aggregate-demand), [Output Gap](https://finicade.com/glossary/output-gap), [Stagflation](https://finicade.com/glossary/stagflation), [Productivity](https://finicade.com/glossary/productivity), [Inflation](https://finicade.com/glossary/inflation)

Source: https://finicade.com/glossary/aggregate-supply