BuyFindarrow_forward

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985

Solutions

Chapter
Section
BuyFindarrow_forward

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985
Textbook Problem

The classical principle of monetary neutrality states that changes in the money supply do not influence ________ variables and is thought most applicable in the ________ run.

a. nominal, short

b. nominal, long

c. real, short

d. real, long

To determine

Nominal and real variables and money neutrality.

Answer

Option ‘d’ is the correct answer.

Explanation

Option (d):

According to the principle of monetary neutrality, only nominal variables are affected by changes in the money supply. Also, monetary neutrality approximately describes the behavior of the economy in the long run. Thus, option ‘d’ is correct.

Option (a):

By the principle of monetary neutrality, nominal variables are affected by changes in the money supply. Also, monetary neutrality approximately describes the behavior of the economy in the long run. Thus, option ‘a’ is incorrect.

Option (b):

By the principle of monetary neutrality, nominal variables are affected by changes in the money supply. Thus, option ‘b’ is incorrect.

Option (c):

Monetary neutrality approximately describes the behavior of the economy in the long run. Thus, option ‘c’ is incorrect.

Concept

Concept introduction:

Nominal variables: Nominal variable refers to those variables that are measured in monetary units.

Real variables: Real variables refer to those variables that are measured in physical units.

Monetary neutrality: Money neutrality refers to the changes in the money supply that do not affect real variables.

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

Why is productivity important?

Principles of Microeconomics (MindTap Course List)

Is unemployment typically short-term or long-term? Explain.

Principles of Macroeconomics (MindTap Course List)

Identify the activities associated with each phase.

Foundations of Business (MindTap Course List)

What information does the statement of cash flows help users assess?

Intermediate Accounting: Reporting And Analysis

Distinguish between operating mergers and financial mergers.

Fundamentals of Financial Management (MindTap Course List)

CALCULATION OF g AND EPS Sidman Productss common stock currently sells for 60.00 a share. The firm is expected ...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

Find all the answers to your study problems with bartleby.
Textbook solutions plus Q&A. Get As ASAP arrow_forward