Which of the following might be proposed by a person schooled in the classical t
ID: 1225909 • Letter: W
Question
Which of the following might be proposed by a person schooled in the classical theory of monetary neutrality?
Changes in the money supply will only affect nominal variables, not real variables.
Money is certainly not neutral. Changes in the amount of money have long-lasting changes on real values in the economy.
Changes in the money supply will affect real interest rates, leading to changes in investement, productivity, and economic growth.
Money and prices are more important than real values and relative prices.
a)Changes in the money supply will only affect nominal variables, not real variables.
b)Money is certainly not neutral. Changes in the amount of money have long-lasting changes on real values in the economy.
c)Changes in the money supply will affect real interest rates, leading to changes in investement, productivity, and economic growth.
d)Money and prices are more important than real values and relative prices.
Explanation / Answer
Answer ) (a) Changes in the money supply will only affect nominal variables, not real variables.
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