Refer to the information provided in Figure 32.2 below to answer the question(s) that follow. Figure 32.2
-Refer to Figure 32.2. According to ________, a(n) ________ fiscal policy in the long run and after all the adjustments have been made increases price level above P₁, but does not change equilibrium output.

Question

Refer to the information provided in Figure 32.2 below to answer the question(s) that follow.

Figure 32.2
-Refer to Figure 32.2. According to ________, a(n) ________ fiscal policy in the long run and after all the adjustments have been made increases price level above P₁, but does not change equilibrium output.

Quizplus · Accepted Answer

Monetarists believe that in the long run, an expansionary fiscal policy will lead to an increase in the price level without affecting the equilibrium output, as the economy will adjust back to its natural level of output.

Refer to the Information Provided in Figure 32