The Property That Asserts That Real Wages, Employment Levels, Output

question 22

Multiple Choice

The property that asserts that real wages, employment levels, output, the composition of output, and real interest rates are independent of changes in the stock of money is called

• A) fiscal neutrality.
• B) monetary neutrality.
• C) governmental neutrality.
• D) the superneutrality of money.
• E) none of the above.

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Definitions:

Perfectly Elastic Demand

A market situation in which demand for a product is infinitely sensitive to changes in price.

Inelastic Demand

A situation where the demand for a product or service does not significantly change in response to price alterations.

Elasticity Value

A measure in economics indicating how the quantity demanded or supplied of a good responds to changes in price or income.

Inelastic Demand

A situation in which the quantity demanded of a good or service changes by a relatively small amount in response to a change in its price.