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According to the theories of macroeconomics, if actual output exceeds potential output, then the output will continue to grow as the price of inputs continues to fall.

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When aggregate supply exceeds aggregate demand what will happen to the price level?

The price will go down.


What will happen if everyone expects inflation to occur?

If people expect inflation, they are more inclined to spend than save money which will lose its value. A surge in demand will cause an an increase in prices (because demand exceeds supply) and voila! Inflation.


What factors contribute to the presence of excess supply and excess demand in the market?

Excess supply in a market occurs when the quantity of a good or service supplied exceeds the quantity demanded at a given price. This can happen due to factors such as overproduction, changes in consumer preferences, or a decrease in demand. On the other hand, excess demand occurs when the quantity demanded exceeds the quantity supplied at a given price, which can be caused by factors such as shortages, sudden increases in demand, or price ceilings.


Will happen if the market is in a disequilibrium of Excess demand?

When the market is in a state of excess demand, it means that the quantity of goods or services demanded exceeds the quantity supplied at the current price. This situation typically leads to upward pressure on prices, as consumers compete to purchase the limited available goods. As prices rise, suppliers may be incentivized to increase production, eventually moving the market back toward equilibrium. However, if the excess demand persists, it can result in shortages and potentially lead to long-term inflationary pressures.


What happen if there is a continued government spending when the economy's capacity is fully employed?

If government spending continues when the economy is at full capacity, it can lead to inflationary pressures as demand exceeds supply. This increased demand can drive up prices, eroding purchasing power and potentially leading to wage-price spirals. Additionally, resources may be overutilized, leading to inefficiencies and potential long-term damage to productive capacity. Ultimately, while short-term gains may occur, the long-term effects can destabilize the economy.

Related Questions

What would happen to a rubber band when weight is added to it?

When weight is added to a rubber band, the band will stretch and elongate. If the weight exceeds the band's elasticity, it may eventually break.


What will happen if anabolism are more exceeds than a catabolism?

If anabolism exceeds catabolism, tissues will accumulate excess nutrients leading to potential weight gain and storage of energy as fat. This imbalance can contribute to obesity and other health issues if not managed properly through a balanced diet and exercise.


What happen when stress exceeds the strength of a material?

the material looses its shape


What part of speech is eventually first?

"Eventually" is an adverb. It describes when something will happen or the way in which something will happen.


What happen when you get too cold?

When you get to cold the thermal energy in your body starts losing heat which causes blood to eventually not have the potential to circulate and you get purple not be able to move eventually and well you die. yes you can freeze to death so be careful


What does eventually happen to the rope of a pulley system?

It will eventually wear out and break.


When aggregate supply exceeds aggregate demand what will happen to the price level?

The price will go down.


What will happen to a material if the stress applied exceeds the ultimate strength?

hehe of course the material will be deform :)


When potential evapotranspiration exceeds precipitation what is likely to happen to moisture storage?

When potential evapotranspiration exceeds precipitation, moisture storage is likely to decrease. This is because the demand for water through evaporation and transpiration surpasses the supply from precipitation, leading to a net loss of moisture in the soil and surrounding environment. As a result, soil moisture levels may decline, potentially affecting plant growth and ecosystem health. If this condition persists, it could lead to drought conditions in the affected area.


How can potential energy be negative in a physical system?

In a physical system, potential energy can be negative when the reference point for measuring energy is set at a higher level than the actual energy of the system. This can happen when the system has less energy than the reference point, resulting in a negative potential energy value.


What happen after the actual release in the book Giver?

the actual release is when they were injected with a chemical that will kill them


What will happen for plants if they don't have light?

eventually they will die

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