Monetary neutrality implies that in the long run:
A) monetary policy does not affect the level of economic activity.
B) long-run aggregate supply depends on monetary policy.
C) changing the money supply does not affect the aggregate price level.
D) aggregate demand is independent from monetary policy.

Question

Quizplus · Accepted Answer

Monetary neutrality suggests that changes in the money supply have no real effects on the economy in the long run, meaning they do not affect the level of economic activity such as output or employment, but can affect nominal variables like the price level.

Monetary Neutrality Implies That in the Long Run