If the economy is at full employment equilibrium, an expansionary monetary policy increases the price level but not output.

Name: If the economy is at full employment equilibrium, an expansionary monetary policy increases the price level but not output.
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Question

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In full employment equilibrium, the economy is operating at its maximum sustainable output. Expansionary monetary policy increases aggregate demand, leading to higher prices but not output, as resources are already fully utilized.

If the Economy Is at Full Employment Equilibrium, an Expansionary