The property that asserts that real wages, employment levels, output, the composition of output, and real interest rates are independent of changes in the stock of money is called
A) fiscal neutrality.
B) monetary neutrality.
C) governmental neutrality.
D) the superneutrality of money.
E) none of the above.

Question

Quizplus · Accepted Answer

Monetary neutrality is the economic theory suggesting that changes in the money supply only affect nominal variables (like prices) and have no effect on real variables (like real GDP or employment). This means that in the long run, an increase or decrease in the money supply does not affect real economic variables like real wages or output levels.

The Property That Asserts That Real Wages, Employment Levels, Output