Most economists believe the principle of monetary neutrality is

Question

a. irrelevant to both the short and long run.
b. mostly relevant to the short run.
c. relevant to both the short and long run.
d. mostly relevant to the long run.

Answer 1

Most economists believe the principle of monetary neutrality is:

d. mostly relevant to the long run.

Monetary neutrality refers to the idea that changes in the money supply do not affect real variables (such as output and employment) in the long run, but may have short-run effects on these variables.