Question:
If the supply of final goods is assumed to be infinitely elastic at constant price over a short period of time, Aggregate output is determined solely by the value of Aggregate demand. This is called __________ Principle.
If the supply of final goods is assumed to be infinitely elastic at constant price over a short period of time, Aggregate output is determined solely by the value of Aggregate demand. This is called __________ Principle.
Updated On: Oct 29, 2024
- Aggregate supply
- Aggregate demand
- Effective demand
- Perfectly inelastic demand
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The Correct Option is C
Solution and Explanation
The principle of effective demand states that when prices are constant and supply is elastic, aggregate output is determined by aggregate demand.
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