To find:
Factor that gets affected due to change in money supply.
Explanation of Solution
According to the notion of money neutrality, commonly known as neutral money, changes in the money supply only have an impact on nominal variables and not actual variables. In other terms, the Federal Reserve (Fed) and central banks' printing of money can affect prices and salaries but not the market's production or structure.
Although many present economists continue to hold the view that neutrality is assumed in the long run once money has circulated across the economy, updated variations of the concept acknowledge that changes in the money supply may have an impact on production or
Thus, from the above we can conclude that the correct option is B.
Chapter 6R Solutions
Krugman's Economics For The Ap® Course
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