If the supply of final goods is assumed to be infinitely elastic at constant price over a short period of time, Aggregate output is determined solely by the value of Aggregate demand. This is called ______ Principle.

The correct option is Effective demand.

In macroeconomics, particularly in Keynesian theory, the short-run determination of aggregate output and employment is based on the principle of effective demand.
Under the assumption that the supply of final goods is infinitely elastic at a constant price level, producers are willing and able to supply any amount of output that is demanded at that prevailing price.

Because the aggregate supply curve is horizontal (infinitely elastic) in this scenario, the actual amount of goods produced (aggregate output) is not constrained by supply-side capacity or resource limitations. Instead, output is determined entirely by how much buyers plan to purchase, which is the total or aggregate demand in the economy.

This relationship is a core component of the Effective demand principle, which posits that the level of output and employment in an economy is determined by the level of aggregate demand that is backed by the ability and willingness to spend.