According to the policy irrelevance proposition, monetary policy can affect real variables

Question

Quizplus · Accepted Answer

The policy irrelevance proposition suggests that monetary policy is only effective in the short run if it is unanticipated. In the long run, real variables such as output and employment are unaffected by monetary policy because they are determined by real factors such as technology and preferences. Therefore, the correct answer is C, only in the short run when the policy is unanticipated.

According to the Policy Irrelevance Proposition, Monetary Policy Can Affect