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What is the reason why tight monetary and / or fiscal policies do not have long-term effects on the level of GDP in Blanchard's AS
What is the reason why tight monetary and / or fiscal policies do not have long-term effects on the level of GDP in Blanchard's AS / AD model?
a. In the medium term, the price level rises so much that the stimuli are neutralized.
b. In the medium term, the price level falls so much that the incentives are neutralized.
c. In the medium term, the stimuli must be withdrawn and counteracted by equal ones
tightening.
d. It is not explained within the model.
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