Monetary Neutrality Means That a Change in the Money Supply

question 225

Multiple Choice

Monetary neutrality means that a change in the money supply

• A)does not change real GDP.Most economists think this is a good description of the economy in the short run and in the long run.
• B)does not change real GDP.Most economists think this is a good description of the economy in the long run but not the short run.
• C)does change real GDP.Most economists think this is a good description of the economy in the short-run and the long run.
• D)does change real GDP.Most economists think this is a good description of the economy in the long run but not the short run.

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Definitions:

Commercial Substance

An occurrence in a transaction that causes a significant change in cash flow, indicating that the transaction has economic consequences.

Net Income

The company's earnings post all deductions, including expenses and taxes, from its overall revenues.

Deferred Tax Liability

This is a tax obligation that a company owes but can pay at a future date due to timing differences between its financial accounting and tax filing.

Deferred Tax Asset

An accounting asset representing the amount of taxes payable in future periods due to deductible temporary differences and carryforwards.