Question

through the late 1990s, the U.S. economy was characterized by steady, historically high rates of growth. In fact, such periods of growth has resulted in inflation, but as of the end of 1999 this inflation has not materialized. What must happen in an economy for output to expand in the short run without the price level increasing?

Answer 1

The aggregate demand can be increased by decreasing the prices and increasing the supply of goods and services for which the supply of goods and services has been increased by optimum utilization of current inputs.

What determines output withinside the short run?

In figuring out how much output to supply, the organization's goal is to maximize profits situation to two constraints: the consumers' demand for the organization's product and the organization's expenses of production.

Consumer demand determines the price at which a perfectly competitive organization might also additionally sell its output.

Thus, The aggregate demand can be increased by decreasing the prices and increasing the supply of goods and services for which the supply of goods and services has been increased by optimum utilization of current inputs.

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