The proposition that changes in the money supply have no long-run effect on real variables is known as the ________.
A)classical dichotomy
B)quantity theory of money
C)neutrality of money
D)Fisher effect
E)none of the above

Question

Quizplus · Accepted Answer

The proposition that changes in the money supply have no long-run effect on real variables is known as the neutrality of money. The classical dichotomy refers to the separation of real and nominal variables, the quantity theory of money relates changes in the money supply to changes in nominal variables, and the Fisher effect refers to the relationship between inflation rates and nominal interest rates.

The Proposition That Changes in the Money Supply Have No