Most economists believe the principle of monetary neutrality is
A)relevant to both the short and long run.
B)irrelevant to both the short and long run.
C)mostly relevant to the short run.
D)mostly relevant to the long run.

Question

Quizplus · Accepted Answer

The principle of monetary neutrality suggests that changes in the money supply only affect nominal variables (such as prices) and have no effect on real variables (such as output or employment) in the long run. This means that while monetary policy can have short-term impacts on the economy, its effects are neutral in the long term, making option D the correct answer.

Most Economists Believe the Principle of Monetary Neutrality Is