To understand the factors that contribute to low, continuous positive inflation rates in economies, let's analyze each option:
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Periodic economic downturns: Typically, economic downturns can lead to deflation or lower inflation rates rather than contributing to sustained positive inflation. So, this option does not relate to continuous positive inflation.
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Shifts in aggregate demand: Changes in aggregate demand can lead to inflation. For instance, if aggregate demand increases faster than aggregate supply, it can result in upward pressure on prices, leading to inflation. Therefore, this option can contribute to continuous positive inflation.
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Shifts in long-run aggregate supply: Shifts in long-run aggregate supply (usually associated with productivity increases) are more likely to stabilize prices or potentially lead to lower inflation rates rather than contribute to continuous positive inflation. So, this option is not typically associated with sustaining positive inflation.
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Full-employment output equilibrium: When an economy is at full employment, it may experience upward pressure on wages and prices due to increased demand for labor and resources. This condition can contribute to inflationary pressures, supporting the idea of continuous positive inflation. Thus, this option can also be associated with low, continuous positive inflation.
Based on this analysis, the options responsible for economies having low, continuous positive inflation rates would be:
- Shifts in aggregate demand
- Full-employment output equilibrium