 Derivation of the aggregate supply curve. The students, the aggregate supply curve shows the relationship between the price level and the aggregate amount of output that forms supply. Variable assumption is that firms behave differently in short-run and long-run. In short-run, their behavior is that they are willing to supply any amount of output that is demanded at a given price. In short-run, whatever price is fixed, they fulfill the amount that is demanded. In long-run, their output level is normal and profit maximizing. In short-run, their output level is normal and profit maximizing. In short-run, their output level is normal and profit maximizing. As a result, in short-run, the aggregate supply curve is not changing because the price is not changing. So, the output of whatever is demanded is going to meet. So, the short-run aggregate supply curve will be a horizontal curve. Now, let us draw it. Similarly, in long-run, I have told you that in long-run, what is the behavior of firms? What is the behavior of firms? In long-run, we assume that all the prices, all the wages that are flexible are adjusted. All the markets are cleared. The labor market is cleared. The labor market is cleared means that the employment is at its full employment level. That is, the demand and supply where they intersect is determined at the employment level. So, the employment level determines the production function and the output level is determined. So, what will happen in long-run? In long-run, the output will be fixed. Whatever is the price level, they have to adjust. The output should not be changed. So, what will happen in the long-run aggregate supply curve? The fixed output level will have a vertical line on its horizontal axis. And in the short-run, I have told you that it will have a horizontal line. Let us draw this. Let us draw this. The output is taken on the horizontal axis and the price level is taken on the vertical axis. So, this is the short-run aggregate supply curve. In the short-run, the price will be fixed. So, on this price, whatever is the demand, the demand of the output will be fulfilled. So, short-run aggregate supply curve is like this. Horizontal line. What will happen in the long-run? In the long-run, I have told you that the output level is fixed. How is it fixed? The prices will be adjusted. The markets will be cleared. So, the demand and supply level will be determined by the employment level, which we are calling as the full employment level. So, it is fixed there. And when we put it in the output production function, the output will be fixed. So, this is the output. The prices will be adjusted. The output should not be changed in the long-run. So, that is why in the long-run, you have the output fixed. Whatever prices are changing, but the output remains at its full employment level. So, you have the vertical curve and the short-run horizontal line. So, when will the short-run aggregate supply curve shift whenever firms change their prices in the short-run? When firms change their prices in the short-run, the short-run aggregate supply curve will shift. Factors like increased cost of producing goods lead firms to increase prices shifting the SRAS curve up. In other words, if their cost increases, they will shift the curve upward in the short-run. And vice versa, if they are reduced, they will shift the curve downward. And anything that increases is the full employment output. That will shift the long-run aggregate supply curve. If it increases, then the long-run aggregate supply curve will shift upward. And if the full employment output decreases, it will shift downward. And what are the factors that will increase or decrease the full employment level? We have read in detail that the labour force is reduced. So, your labour supply curve will shift and the employment level will increase and the output level will increase. If there is a change in productivity, then the full employment level will be changed and the labour product will increase. And the labour demand curve will shift and the employment level will increase and the full employment level will increase and the long-run aggregate supply curve will shift upward. So, today we have done an overview of the long-run aggregate supply curve and how it will be determined and how these shifts will be done without the labour force. Thank you very much.