In the long run, changes in the money supply _____ the aggregate price level and _____ aggregate output.
A) affect; affect
B) affect; do not affect
C) do not affect; affect
D) do not affect; do not affect

Question

Quizplus · Accepted Answer

In the long run, changes in the money supply affect the aggregate price level due to inflation or deflation but do not affect aggregate output, as the economy adjusts to changes in the money supply and returns to its potential output.

In the Long Run, Changes in the Money Supply _____