Fiscal and monetary policy can be used to change the price level but not output when the aggregate
A)Supply curve is horizontal.
B)Supply curve is vertical.
C)Supply curve is upward-sloping but not vertical.

Question

Quizplus · Accepted Answer

When the aggregate supply curve is vertical, it indicates that the economy is operating at its full potential and any attempts to use fiscal or monetary policy to increase output will only result in higher prices. Therefore, only the price level can be affected by these policies.

Fiscal and Monetary Policy Can Be Used to Change the Price