Assuming that the economy is in the long run equilibrium at full employment, an expansionary monetary policy _______ the price level and _______ output.
A) increases; doesn't change
B) increases; increases
C) doesn't change; doesn't change
D) decreases; increases

Question

Quizplus · Accepted Answer

In the long run, an expansionary monetary policy increases the price level but does not change output, as the economy is already at full employment.

Assuming That the Economy Is in the Long Run Equilibrium