State with reasons whether you agree or disagree with the following statements.
2) Aggregate supply is influenced by the state of technology only.
Answer: The above statement is incorrect. Besides, the state of technology, the aggregate supply is affected by various other factors as well, namely, natural resources, labour force and stock of capital. The aggregate supply function can be represented as follows.
Where,
AS = Aggregate supply
N = Natural resources
L = Labour
K = Stock of capital
T= State of technology
