Aggregate production function

An aggregate production function is a way to describe how the total output of a country’s economy depends on the combined inputs used to produce goods and services, mainly labor, capital, and technology. It shows how increasing these inputs can lead to more economic output, but not always in a perfectly proportional way. This helps economists understand economic growth, efficiency, and how different factors contribute to producing everything an economy makes. Essentially, it links inputs like work, tools, and knowledge to the overall amount of goods and services produced.