Fiscal and monetary policies typically affect the short- run level of GDP because they cause shifts in the but they will not generally have any long- run effects on real GDP unless they affect .
A)AD curve; the level of potential output
B)AS curve; factor- utilization rates
C)AS curve; factor supplies or factor productivity
D)AD curve; factor- utilization rates
E)AD curve; the unemployment rate

Question

Quizplus · Accepted Answer

Fiscal and monetary policies affect the short-run level of GDP by shifting the Aggregate Demand (AD) curve. However, for long-run effects on real GDP, these policies must affect the level of potential output, which is determined by factors like technology, resources, and institutional structures.

Fiscal and Monetary Policies Typically Affect the Short- Run Level