Assuming a long-run aggregate supply curve, an increase in the money supply results in ________ in output and ________ in price level.
A) a decrease; a decrease
B) an increase; no change
C) a decrease; no change
D) no change; an increase

Question

Quizplus · Accepted Answer

In the context of a long-run aggregate supply curve, an increase in the money supply does not change output because the economy is at its full employment level, but it does lead to an increase in the price level due to inflationary pressures.

Assuming a Long-Run Aggregate Supply Curve, an Increase in the Money