According to the monetarist view,the aggregate supply curve is:
A) Horizontal until full employment is reached and then it becomes vertical.
B) Horizontal at all levels of output.
C) Vertical at the natural rate of unemployment.
D) First horizontal,then upward sloping,and finally vertical.

Question

Quizplus · Accepted Answer

According to the monetarist view, the aggregate supply curve is vertical at the natural rate of unemployment. This means that once the economy reaches full employment, any attempts to increase output through monetary policy will only result in higher prices, rather than more production. The curve is not horizontal at all levels of output as suggested in option B, nor does it become first horizontal, then upward sloping, and finally vertical as suggested in option D. Option A is partially correct, as the curve is indeed horizontal until full employment is reached, but it then becomes vertical, rather than upward sloping.

According to the Monetarist View,the Aggregate Supply Curve Is