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Why will the price level tend to rise as firms get closer to their productive capacity?...

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Economics

Why will the price level tend to rise as firms get closer totheir productive capacity? Would expansionary fiscal and monetarypolicy be beneficial on the vertical portion?

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3.6 Ratings (356 Votes)
As there is increased production in the short run aggregate supply is considered to be flat for a considerable level of output because there is an excess capacity of production which does not create    See Answer
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