Neutrality of money

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Neutrality of money. 1 connected concept: Quantity theory of money (related to).

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Community · Velocity of money

Summary

Neutrality of money is the idea that a change in the money supply affects only nominal variables in the economy such as prices, wages, and exchange rates, with no effect on real variables, like employment, real GDP, and real consumption.

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theoretical implication of the quantity theory
The quantity theory often assumes the neutrality of money, which posits that changes in the money supply only affect nominal variables like prices rather than real variables like output.
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