Empirically, a Large Amount of Evidence Suggests That Money Neutrality

question 39

Multiple Choice

Empirically, a large amount of evidence suggests that money neutrality ________, but changes in money supply ________.

• A) holds in the short run; do not affect nominal variables
• B) does not hold in the long run; can have real effects in the short run
• C) holds in the short run; can have real effects in the long run
• D) holds in the long run; can have real effects in the short run
• E) does not hold in the long run; have an effect on unemployment in the long run

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Definitions:

Adam Smith

A Scottish economist, philosopher, and author known for his theories on free market economics presented in his book "The Wealth of Nations."

Invisible Hand

A metaphor introduced by economist Adam Smith to describe the self-regulating behavior of the marketplace, where individuals acting in their own self-interest inadvertently benefit society at large.

Petty Bourgeoisie

Class of small business owners and employees who own some means of production but do not exploit large labor forces, often seen as part of the middle class.

Middle Class

A social group between the upper and working classes, including professionals, business people, and others with a moderate to high standard of living.