According to the principle of monetary neutrality, what will an increase in the quantity of money also increase?
A) employment
B) nominal GDP
C) the incentive to save
D) labour productivity

Question

Quizplus · Accepted Answer

According to the principle of monetary neutrality, an increase in the quantity of money will only affect nominal variables, not real variables. Therefore, an increase in the quantity of money will increase nominal GDP, but it will not affect employment, the incentive to save, or labour productivity.

According to the Principle of Monetary Neutrality, What Will an Increase