In the AD-AS model, fiscal or monetary policy cannot affect the level of output in
A)the medium run and the long run
B)the medium run and the short run
C)the short run only
D)the medium run only
E)the long run only

Question

Quizplus · Accepted Answer

In the AD-AS (Aggregate Demand-Aggregate Supply) model, it is generally accepted that fiscal or monetary policy can affect the level of output in the short run, but in the long run, the economy tends to return to its potential output level, making these policies ineffective at changing the output level in the long run.

In the AD-AS Model, Fiscal or Monetary Policy Cannot Affect