Monetary Neutrality Is a Characteristic of the Aggregate Demand-Aggregate Supply

question 124

Multiple Choice

Monetary neutrality is a characteristic of the aggregate demand-aggregate supply model in:

• A) both the short run and the long run.
• B) in neither the short run nor the long run.
• C) in the short run, but not in the long run.
• D) in the long run, but not in the short run.

---

Definitions:

Risk-free

An investment category that promises return payments with zero default risk, often exemplified by treasury bonds of stable governments.

Call Option

A financial contract giving the buyer the right, but not the obligation, to purchase an asset at a specified price within a specific time period.

Put

A put is an options contract giving the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a predetermined price before the contract expires.

Option

A financial contract granting the buyer the right, but not the obligation, to buy or sell an asset at a set price within a specific time.