Question

In a speech in September 1998, then-Chairman of the Federal Reserve Alan Greenspan posed the question as to whether there was a new economy. He noted that inflation was falling even as the economy was well into a business expansion. According to an aggregate demand and aggregate supply framework, this result could be explained by aggregate _____ and aggregate

Answer 1

Answer:

demand increased; supply increased even more      

Explanation:

In economics, aggregated demand means the demand of a total or aggregate  goods as well as services in the country at a certain time. It is also termed as effective demand.

And aggregate supply is the supply of all the good and services that the companies and organization are willing to sell in the given period of the economy.

According to the frame work of aggregate demand and supply, the inflation was falling or reducing even when the economy was expanding. This is because when the demand of a product increases, the supply is increased more.