What is meant by aggregate supply?

Aggregate supply refers to the total amount of goods and services that firms in an economy are willing to produce and sell at various price levels during a specific time period. This concept captures the willingness of businesses to supply goods based on the prevailing prices, which can influence overall economic output. When prices rise, firms are generally more inclined to increase production to capitalize on higher potential profits, leading to a higher aggregate supply.

The other choices do not accurately reflect the definition of aggregate supply. For instance, the total amount of goods consumers are willing to buy is related to aggregate demand, not supply. The amount of goods produced in a year pertains more to total production or output rather than supply's relationship with price levels. Lastly, the overall market price of goods sold does not encapsulate the concept of aggregate supply as it focuses solely on price without considering the quantity supplied in response to variance in that price. Thus, understanding aggregate supply is crucial for analyzing how various factors, including price changes, can impact overall economic production.