Question

In the long run monetary policy is neutral means that the long-run impact of monetary policy results inA. output, spending and employment that are unchangedB. prices that are unchangedC. output that is unchanged but investment spending does changeD. output, spending, employment and prices that are all unchanged

Answer 1

A. output, spending and employment that are unchanged

Step-by-step explanation:

Money, in the long run, is considered as 'neutral', which means that it only impacts nominal variables but do not influence the economy structure or real variables. Then, the monetary policy that operates through the money supply will only impact nominal GDP, price levels and wages. It would not have an effect over output, real spending or employment.