Most economists believe that monetary neutrality provides
A)a good description of both the long run and the short run.
B)a good description of neither the long run nor the short run.
C)a good description of the short run,but not the long run.
D)a good description of the long run,but not the short run.

Question

Quizplus · Accepted Answer

Most economists believe that in the long run, changes in the money supply have no real effect on the economy, meaning monetary neutrality holds true. However, in the short run, changes in the money supply can influence prices, output, and employment, meaning monetary neutrality does not hold true. Therefore, D is the best answer as it states monetary neutrality is a good description of the long run, but not the short run.

Most Economists Believe That Monetary Neutrality Provides