In the IS-LM model, policy is said to be ineffective in the long run because it cannot change
A) the price level.
B) output.
C) the interest rate.
D) all of the above.

Question

Quizplus · Accepted Answer

In the long-run framework of the IS-LM model, it is generally accepted that monetary and fiscal policies cannot change the natural level of output, which is determined by factors such as technology, resources, and the labor force. The economy naturally adjusts to its potential output level regardless of policy interventions.

In the IS-LM Model, Policy Is Said to Be Ineffective