When the economy reaches its potential output,the price level cannot rise any further.

Name: When the economy reaches its potential output,the price level cannot rise any further.
Brand: Quizplus
Rating: 4.8 (41 reviews)

Question

Quizplus · Accepted Answer

Potential output refers to the maximum sustainable level of output an economy can achieve without causing inflation. However, the price level can still rise due to factors like demand-pull inflation or cost-push inflation, even when the economy is at its potential output.

When the Economy Reaches Its Potential Output,the Price Level Cannot