,explanation on AS

1. When spare capacity is high, aggregate supply will be elastic, this means that a rise in agg demand can be met easily by increased output and there is little threat or prices rising 2. Amount of space capacity declines 3. There is a possibility of diminishing returns in production 4. Bottlenecks appear in the supply of key inputs including skilled labour 5. When AS is perfectly inelastic, an economy is at full capacity; this means that further increases in AD are purely inflationary in the short run with little extra real output.