Question 1
Economic policies are ineffective concerning quantities of output directly when
◦ the aggregate supply curve is flat.
◦ the aggregate demand is flat.
◦ the aggregate supply is vertical.
◦ the economy is not producing at capacity.
Question 2
Economic policies are effective at changing output when
◦ the economy is not producing at capacity.
◦ the economy is producing at its potential output.
◦ the unemployment rate is at the natural rate.
◦ the aggregate supply curve is vertical.