Fiscal and monetary policy can be used to change the price level but not output when the aggregate
A)Supply curve is horizontal.
B)Supply curve is vertical.
C)Supply curve is upward-sloping but not vertical.
D)Demand curve is vertical.

Question

Quizplus · Accepted Answer

When the supply curve is vertical, it means that output is fixed at a certain level regardless of changes in the price level. Therefore, fiscal and monetary policy can only affect the price level, and not output.

Fiscal and Monetary Policy Can Be Used to Change the Price