The principle of monetary neutrality implies that an increase in the money supply will increase
A)real GDP and the price level.
B)real GDP, but not the price level.
C)the price level, but not real GDP.
D)neither the price level nor real GDP.

Question

Quizplus · Accepted Answer

The principle of monetary neutrality suggests that changes in the money supply only affect nominal variables (like the price level) in the long run, not real variables (like real GDP).

The Principle of Monetary Neutrality Implies That an Increase in the Money