Aggregate output is determined solely by the level of aggregate demand. This is known as effective demand principle. Which of the following is not the assumptions behind this principle? Option 1: Price of final goods is constant. Option 2: Interest rates are constant. Option 3: Aggregate supply is perfectly elastic. Option 4: Aggregate demand is perfectly elastic.

The answer is 'Aggregate demand is perfectly elastic.'. View full solution:

CUET Economics - Aggregate output is determined solely by the level of aggregate demand. This is known as effective demand principle. Which of the following is not the assumptions behind this principle? | PYQs + Solutions

CUET Economics 2025 15 May Shift 1

Macro

Medium

Price of final goods is constant.

Interest rates are constant.

Aggregate supply is perfectly elastic.

Aggregate demand is perfectly elastic.

✅ Correct Option: 4