Long-term aggregate supply (LAS)

Long term aggregate supply are described in an AD-AS model by a LAS-curve. The LAS curve is a straight line with a completely vertical slope describing the relationship between supply and price level when it is full employment in the economy and all other factors are held constant.

A LAS curve shows the potential GDP level that a country can achieve when there is full employment in the economy. Long-term aggregate supply is the total supply of products in a country in the long term. Long-term aggregate supply is completely independent of the price level. Long-term aggregate supply is affected by the number of hours worked in the economy, productivity changes and technological innovations.