The Long- Run Neutrality of Money Implies That

question 11

Multiple Choice

The long- run neutrality of money implies that

• A)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.
• 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)changes to the money supply never have any effect on real GDP.
• E)the economy's level of potential output will adjust to accommodate any change in the money supply.