1. does monetary neutrality mean that changes in the money supply can never affe

Question

1.

does monetary neutrality mean that changes in the money supply can never affect ral GDP?

A. no.monetary neutrality only means that changes in the money supply will not affect real GDP in the short run. Changes in the money supply can and do affect real GDP in the long run.

B.Yes. monetary neutrality means that money supply changes only affect one variable, the price level. Real GDP is never impacted.

C. No. monetary neutrality only means that changes in the money supply will not affect real GDP in the long run. Changes in the money supply can and do affect realGDP in the short run.

D.Yes, monetary neutrality means that money supply changes only affect one varible, the ?nominal interest rate. Real GDP is never impacted.

why would this happen?

Explanation / Answer

1)

B.Yes. monetary neutrality means that money supply changes only affect one variable, the price level. Real GDP is never impacted.

2)

The short-run aggregate supply curve will shift rightwards.

C) This happens only after government interference.

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