Neutrality of money is the idea that:
A) changes in aggregate price levels do not affect real outcomes in the economy.
B) monetary policy conducted by the Fed has no real impact on the economy.
C) it makes no difference who is spending each dollar in real terms.
D) there is no difference between fiscal and monetary policy as long as the same amount of money is injected into the economy.

Question

Quizplus · Accepted Answer

Neutrality of money refers to the concept that changes in the money supply only affect nominal variables (like prices) in the long run, without impacting real economic variables (such as output, employment, and real GDP). This means that while the money supply can influence inflation or deflation, it does not change the fundamental economic conditions like productivity or employment levels in the long term.

Neutrality of Money Is the Idea That