short-run (or surprise) aggregate supply (SAS) curve is a positively
sloped line in a diagram with inflation measured along the vertical
and income measured along the horizontal axis. This line indicates
how much output all firms are willing to produce at different inflation
The SAS curve draws together the production function and the employment
decisions obtained at differed inflation rates (or price levels)
in the labour market. The SAS curve is derived in two steps:
combines the production function and the labour market to obtain
the AS curve. The AS curve indicates how much output firms produce
at different price levels.
shows how the AS curve, which has the price level on the vertical
axis, can be redressed as an SAS curve, which has inflation on the
Further reading on pp. 167-168.