The classical dichotomy and monetary neutrality are represented graphically by
A)an upward-sloping long-run aggregate-supply curve.
B)a vertical long-run aggregate-supply curve.
C)an upward-sloping short-run aggregate-curve.
D)a downward-sloping aggregate-demand curve.

Question

Quizplus · Accepted Answer

The classical dichotomy and monetary neutrality suggest that changes in the money supply do not affect real variables in the long run, which is represented graphically by a vertical long-run aggregate-supply curve. This indicates that the economy's output is determined by factors other than the price level in the long run.

The Classical Dichotomy and Monetary Neutrality Are Represented Graphically by