According to the concept of monetary neutrality, _____ in the money supply _____ real GDP _____ the price level.
A) increases; do not change; but do raise
B) increases; raise; but do not change
C) decreases; lower; but do lower
D) increases; raise; but do raise

Question

Quizplus · Accepted Answer

According to the concept of monetary neutrality, changes in the money supply do not affect real GDP but do raise the price level. Therefore, an increase in the money supply would not change real GDP but would cause an increase in the price level. Option A correctly reflects this concept.

According to the Concept of Monetary Neutrality, _____ in the Money