Aggregate supply is defined as the total supply of goods and services that firms in a national economy plan on selling during a specific time period. Which option correctly describes this concept?

• A. Total demand for goods and services by households
• B. Total supply of goods/services that firms in a national economy plan on selling during a specific time period
• C. Value of exports
• D. Government spending

Answer: (B)

Aggregate supply is about how much firms in the economy intend to produce and sell in a given period, based on factors like the price level, costs, and technology. The described statement matches this idea precisely: it refers to the total supply that firms plan to bring to the market in a specific time frame. This distinguishes it from aggregate demand, which is about households’ and other agents’ willingness to buy (not sell). It also isn’t about the value of exports or government spending, which are components of demand-side forces or policy, not the total planned output by firms. So this option correctly captures what aggregate supply measures.