In the long run, when money is neutral, which of the following increases when the money supply growth rate increases?
A) real output growth
B) real interest rates
C) nominal interest rates
D) the money supply divided by the price level

Question

Quizplus · Accepted Answer

In the long run, money is neutral, meaning it does not affect real variables like real output growth or real interest rates. However, an increase in the money supply growth rate leads to higher inflation, which increases nominal interest rates due to the Fisher effect.

In the Long Run, When Money Is Neutral, Which of the Following