If the supply of money increases, the long-run aggregate supply curve suggests that output will not change but price level will.

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Quizplus · Accepted Answer

The long-run aggregate supply curve is vertical, indicating that in the long run, the economy's total output is determined by factors other than the price level, such as technology and resources. An increase in the money supply can lead to higher prices (inflation) but does not change the economy's capacity to produce goods and services, hence output remains unchanged in the long run.

If the Supply of Money Increases, the Long-Run Aggregate Supply