An implication of the long-run aggregate supply curve is that continuous increases in the money supply will result in continuous
A)increases in prices.
B)decreases in output and prices.
C)decreases in output.
D)increases in output and prices.

Question

Quizplus · Accepted Answer

In the long run, the aggregate supply curve is vertical, indicating that output is at its natural level and is not affected by changes in the money supply. Continuous increases in the money supply will lead to higher prices (inflation) without affecting output.

An Implication of the Long-Run Aggregate Supply Curve Is That