Since classical economists and monetarists believe that the economy operates at full employment along the vertical segment of aggregate supply,:

Question

Quizplus · Accepted Answer

Classical economists and monetarists believe that the economy operates at full employment, meaning that any increase in aggregate demand will only result in an increase in prices because the economy cannot produce any more output. Therefore, an increase in the money supply (which increases aggregate demand) can only end up raising the price level.

Since Classical Economists and Monetarists Believe That the Economy Operates