The idea that nominal variables, such as the money stock, do not affect real variables in the long run, such as real output, is referred to asA. the velocity conceptB. the Mankiw effectC. price effectD. monetary neutrality

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Business

Blaze Cunningham

15 July, 10:46

The idea that nominal variables, such as the money stock, do not affect real variables in the long run, such as real output, is referred to asA. the velocity conceptB. the Mankiw effectC. price effectD. monetary neutrality

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Answers (1)

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Keshawn Stewart · Answer 1

The correct answer is letter "D": monetary neutrality.

Explanation:

Austrian economist Friedrich A. Hayek (1899-1992) referred to Monetary Neutrality as a theory that states that only nominal variables and not real variables affect money supply. At the same time, the money supply will affect prices and wages in the market but will not influence the output of the overall economy.