Monetary neutrality implies that a decrease in the money supply will:
A) not affect the price level.
B) increase real GDP.
C) decrease real interest rates.
D) not affect unemployment.

Question

Quizplus · Accepted Answer

Monetary neutrality suggests that changes in the money supply only affect nominal variables like prices and wages, not real variables like unemployment or real GDP, in the long run.

Monetary Neutrality Implies That a Decrease in the Money Supply