If the short-run aggregate supply curve is horizontal and the long-run aggregate supply curve is vertical, then a change in the money supply will change ______ in the short run and change ______ in the long run.
A) only prices; only output
B) only output; only prices
C) both prices and output; only prices
D) both prices and output; both prices and output

Question

Quizplus · Accepted Answer

In the short run, with a horizontal aggregate supply curve, changes in the money supply can change output without affecting prices. In the long run, with a vertical aggregate supply curve, changes in the money supply only affect prices, not output.

If the Short-Run Aggregate Supply Curve Is Horizontal and the Long-Run