The Long-Run Neutrality of Money Implies That

question 109

Multiple Choice

The long-run neutrality of money implies that

• A)changes to the money supply have no effect on either the price level or real GDP.
• B)changes to the money supply never have any effect on real GDP.
• C)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.
• D)the economy's level of potential output will adjust to accommodate any change in the money supply.
• E)in response to any change in the money supply,the demand for money will adjust to cancel out its effects on all macroeconomic variables.

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Definitions:

Fewest Constructs

Refers to employing the minimum number of conceptual or theoretical tools necessary to effectively understand and interpret a phenomenon or data set.

Dependent Variable

In experimental and observational studies, it is the variable being tested and measured, which is hypothesized to be affected by one or more independent variables.

Self-Esteem

An individual’s subjective evaluation of their own worth or value.

Hypothesis

A proposed explanation made on the basis of limited evidence as a starting point for further investigation.