If money is neutral and velocity is stable,an increase in the money supply creates a proportional increase in

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Quizplus · Accepted Answer

If money is neutral and velocity is stable, an increase in the money supply leads to a proportional increase in nominal output, which is the product of real output and the price level. However, since money is neutral, real output remains unchanged, so the increase is reflected in the price level and nominal output.

If Money Is Neutral and Velocity Is Stable,an Increase in the Money