Which Statement Is NOT Consistent with Monetary Neutrality

question 38

Multiple Choice

Which statement is NOT consistent with monetary neutrality?

• A) It is most applicable to long-run situations.
• B) The amount of money has no effect on the economy.
• C) Changes in the money supply will change the price level.
• D) Output is not affected by the money supply in the long run.

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Definitions:

Sensory Adaptation

The process by which sensory receptors become less sensitive to constant or unchanging stimuli.

Stimulus Energies

The physical or environmental energies that an organism can detect and respond to, such as light, sound, and temperature.

Sensory Receptors

Specialized cells or nerve endings that respond to changes in the environment and transmit signals to the nervous system.

Sensation

The process by which our sensory receptors and nervous system receive and represent stimulus energies from our environment.