ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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What is an implication of the neutrality of money in the long run?.
(a) The economy's level of potential output will adjust to accommodate any change in the money
supply.
(b) Changes to the money supply have no effect on either the price level or real GDP.
(c) In response to any change in the money supply, the demand for money will adjust to cancel out its
effects on all macroeconomic variables.
(d) In response to any change in the money supply, the economy's adjustment process will bring Y back
to Y*, which is unaffected by the change in the money supply.
(e) Changes to the money supply never have any effect on real GDP.
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Transcribed Image Text:What is an implication of the neutrality of money in the long run?. (a) The economy's level of potential output will adjust to accommodate any change in the money supply. (b) Changes to the money supply have no effect on either the price level or real GDP. (c) In response to any change in the money supply, the demand for money will adjust to cancel out its effects on all macroeconomic variables. (d) In response to any change in the money supply, the economy's adjustment process will bring Y back to Y*, which is unaffected by the change in the money supply. (e) Changes to the money supply never have any effect on real GDP.
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