Monetary neutrality means that money:
A) has no impact on real variables such as national output.
B) is not used to gain advantages or support particular participants in wars.
C) supply cannot be increased or decreased but will remain constant.
D) the price level is not an indicator of the strength and health of an economy.

Question

Quizplus · Accepted Answer

Monetary neutrality is the concept that changes in the money supply only affect nominal variables (like prices) in the long run, and have no effect on real variables (such as national output, employment, and real GDP). This means that increasing or decreasing the money supply does not have a direct impact on the economy's production capabilities or real economic growth.

Monetary Neutrality Means That Money