The theory of a flat short-run aggregate-supply curve implies that an increase in money supply should increase output and employment, while the price level should increase at a slow pace.
a. Why does output increase sometimes much slowly than this theory might predict?
b. How would low inflation hinder economic growth?

Question

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The Answer of The theory of a flat short-run aggregate-supply curve implies that an increase in money supply should increase output and employment, while the price level should increase at a slow pace.
a. Why does output increase sometimes much slowly than this theory might predict?
b. How would low inflation hinder economic growth?

The Theory of a Flat Short-Run Aggregate-Supply Curve Implies That