When the economy is initially at full employment, an:

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Expansionary monetary policy, when the economy is at full employment, will increase the money supply, leading to higher demand. This increased demand can push prices up in the short run due to the economy operating at its capacity. In the long run, the increased money supply can continue to exert upward pressure on prices, leading to inflation. Thus, both in the short run and the long run, the price level is likely to increase.

When the Economy Is Initially at Full Employment, An