The aggregate supply curve is depicted as vertical in the simple quantity theory of money.

Question

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In the simple quantity theory of money, the aggregate supply curve is assumed to be vertical in the long run. This is because changes in the money supply are believed to only affect prices, not output. In the short run, however, the aggregate supply curve may be upward sloping due to factors such as input costs and productivity.

The Aggregate Supply Curve Is Depicted as Vertical in the Simple