Supply constrained economy is an economy in which the supply of factors of production limits the total output. The factors of production include labor, capital, and natural resources.
In this economy, an increase in aggregate demand does not affect increasing output as the economy does not have reserves of labor, equipment, and raw material stock to respond to increased demand. Therefore, any demand-side policy, such as fiscal policy and monetary policy, will only create upward pressure on prices.
Of course, the government can suppress price increases through general price controls and rationing.
The socialist economy generally experiences supply constraints. In this system, the government mobilizes people to work on government projects, so no one is unemployed. When everyone has worked on the project, there are no workers left, so the economy cannot increase output further.