In the short run if households' perceived money growth and inflation equals the actual money growth and inflation, then
A)money affects real variables like labour supply.
B)money affects real variables like GDP.
C)the model is still neutral even in the short run.
D)all of the above.

Question

Quizplus · Accepted Answer

If households' perceived money growth and inflation equals the actual money growth and inflation, then the model is still neutral even in the short run. This means that changes in the money supply only affect nominal variables like prices and wages, but not real variables like GDP or labour supply.

In the Short Run If Households' Perceived Money Growth and Inflation