When the AS curve is vertical,increases in AD will
A)Increase the average price level but have no impact on unemployment.
B)Increase the average price level and decrease unemployment.
C)Increase both the average price level and unemployment.
D)Have no impact on either the average price level or unemployment.

Question

Quizplus · Accepted Answer

When the AS curve is vertical, it means that the economy has reached its full capacity and any increase in AD will only lead to an increase in the average price level but will not impact unemployment. This is because the economy is producing at its maximum potential and cannot produce more output to meet the increase in demand, resulting in higher prices.

When the AS Curve Is Vertical,increases in AD Will