Equation Of Exchange And Monetary Neutrality
Which of the following statements best distinguishes the equation of exchange (MV = PQ) from the theory of monetary neutrality?
A
Monetary neutrality relates money supply to nominal GDP; equation of exchange suggests money supply changes don’t affect real GDP.
B
Both indicate that money supply has no impact on nominal GDP.
C
Both suggest that changes in money supply directly affect real GDP.
D
Equation of exchange relates money supply to nominal GDP; monetary neutrality suggests money supply changes don’t affect real GDP.
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