Final answer:
Economies experience low, continuous positive inflation rates mainly due to shifts in aggregate demand, particularly when aggregate demand increases outpace aggregate supply, leading to inflation without a corresponding increase in real GDP or changes in unemployment.
Step-by-step explanation:
The low, continuous positive inflation rates in economies are primarily caused by shifts in aggregate demand. When aggregate demand rises more rapidly than aggregate supply, it leads to persistent inflationary pressures as the price level increases, even though real GDP and the natural unemployment rate remain unchanged in the long run.
This dynamic is illustrated by the vertical long-run aggregate supply (LRAS) curve in various economic models, where different levels of aggregate demand (AD), such as AD, AD₁, and AD₂, only result in changes to the price level, not to real output or unemployment over time. Conversely, shifts in AD that do not run ahead of the increases in aggregate supply would not cause consistent inflation. Instead, efforts like fiscal policy interventions aim to shift AD appropriately to match full-employment output equilibrium and modulate deep economic cycles.
Therefore, it is the shifts in aggregate demand rather than shifts in long-run aggregate supply, periodic economic downturns, or full-employment output equilibrium that are responsible for maintaining moderate inflation rates.