According to the policy irrelevance proposition

Question

Quizplus · Accepted Answer

The policy irrelevance proposition states that monetary policy cannot affect the real economy in the long run, only the price level. Therefore, expansionary monetary policy will only lead to a higher rate of inflation in the long run, but will not have a lasting impact on unemployment or other real variables. This is consistent with choice D, which implies that monetary policy cannot reduce unemployment in the long run. Choices A, B, and C are all inconsistent with the policy irrelevance proposition.

According to the Policy Irrelevance Proposition