Economic policies are ineffective concerning quantities of output directly when
A) the aggregate supply curve is flat.
B) the aggregate demand is flat.
C) the aggregate supply is vertical.
D) the economy is not producing at capacity.

Question

Quizplus · Accepted Answer

When the aggregate supply curve is vertical, it means that the economy is producing at its maximum capacity and any increase in aggregate demand will only lead to an increase in prices, but not output. Therefore, economic policies will be ineffective in increasing the quantity of output directly.

Economic Policies Are Ineffective Concerning Quantities of Output Directly When