If the economy starts from a position of excess capacity, an increase in aggregate demand can increase output without increasing the price level.

Name: If the economy starts from a position of excess capacity, an increase in aggregate demand can increase output without increasing the price level.
Brand: Quizplus
Rating: 5.0 (39 reviews)

Question

Quizplus · Accepted Answer

When there is excess capacity, resources are underutilized, allowing output to increase without upward pressure on prices until full capacity is reached.

If the Economy Starts from a Position of Excess Capacity