When the economy is on the flatter part of the short run aggregate supply curve, efforts to change inflation with monetary policy will be ____ successful and efforts to stimulate the economy will be ____ successful.
A)More; more
B)More; less
C)Less; more
D)Less; less

Question

When the economy is on the flatter part of the short run aggregate supply curve, efforts to change inflation with monetary policy will be ____ successful and efforts to stimulate the economy will be ____ successful.
A)​More; more
B)​More; less
C)​Less; more
D)​Less; less

Quizplus · Accepted Answer

When the economy is on the flatter part of the short run aggregate supply curve, there is more spare capacity and unemployment, which means that efforts to stimulate the economy will be more successful. However, efforts to change inflation with monetary policy will be less successful because the economy is not operating at its potential and there is less upward pressure on prices.

When the Economy Is on the Flatter Part of the Short