If the AD curve is relatively flat, the Fed is willing to accept large changes in output to keep the price level stable.

Question

Quizplus · Accepted Answer

If the AD curve is relatively flat, it means that a given change in the price level results in a relatively large change in output. Therefore, the Fed would be willing to accept larger changes in output to achieve a stable price level. This is because it would require a larger change in the money supply to shift the AD curve, which would have a larger impact on output, but a smaller impact on the price level.

If the AD Curve Is Relatively Flat, the Fed Is