How does the output affect price levels in an economy?
1 Answer
Jul 4, 2015
the output in an economy,the GDP,affects inflation which in turn affects the price levels.
Explanation:
in an economy, there is a natural output level which is a level where all the resources in an economy are used optimally. if the level of output rises beyond this natural level, there are inflationary pressures that push the price level upwards. the opposite is also true.
