What is aggregate supply?

Aggregate supply refers to the total quantity of goods and services that firms in an economy are willing and able to produce at a given overall price level within a specific time period. The focus is on how much output is being supplied, based on planned production levels that businesses determine based on factors like expected demand, costs of production, and other economic conditions.

Choosing the option that defines aggregate supply as the supply planned by firms to sell at a given price accurately captures this concept, emphasizing the relationship between price levels and the quantity of goods that firms intend to supply. This relationship is crucial in understanding how shifts in aggregate supply can impact overall economic output and inflation.

In contrast, other options do not align with the definition of aggregate supply. The total demand for goods and services describes aggregate demand, while the amount of money available in the economy pertains to monetary supply, and the overall inflation rate relates to the changes in price levels rather than the quantity of output supplied.