The economic response to the overnight reduction in the French money supply by 20 percent in 1724,
A) confirmed the neutrality of money because no real variables were affected by this nominal change.
B) confirmed the quantity theory by leading to an immediate 20 percent reduction in the price level.
C) confirmed that money is not neutral in the short run because both output and prices dropped.
D) contradicted Okun's law because decreases in output were not associated with increases in unemployment.
Correct Answer:
Verified
Q57: Monetary neutrality is a characteristic of the
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Q61: A supply shock does not occur when:
A)
Q63: Starting from long-run equilibrium, if the velocity
Q64: Use the following to answer questions :
Exhibit:
Q65: When the French money supply was reduced
Q66: Use the following to answer questions :
Exhibit:
Q67: Use the following to answer questions :
Exhibit:
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