Assume the Aggregate Supply Curve Is Horizontal and the Economy

Multiple Choice

Assume the aggregate supply curve is horizontal and the economy is experiencing a recession.Which of the following is most likely to occur if the Fed pursues expansionary monetary policy?

A) The equilibrium price level and output will both increase.
B) The equilibrium price level and output will both decrease.
C) The equilibrium price level will increase but output will stay the same.
D) The equilibrium output will increase but the price level will stay the same until full employment is reached.