In the long run, the only effect of monetary policy is on:

Question

Quizplus · Accepted Answer

The long-run effect of monetary policy is primarily on the aggregate price level, as changes in monetary policy influence the supply of money and, in turn, affect the overall price level in the economy. While monetary policy can have short-term effects on the interest rate and output level, these effects are limited and temporary, and the long-run impact is primarily on aggregate price levels. The long-run aggregate supply is affected by factors such as technology, labor force growth, and capital accumulation, and is not significantly impacted by monetary policy.

In the Long Run, the Only Effect of Monetary Policy