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ISSN: 2162-6359

International Journal of Economics & Management Sciences
Open Access

Monetary Neutrality

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Monetary Neutrality

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Monetary Neutrality

Monetary Neutrality is the change in the money supply that have no effect on real economic variables such as output, real interest rates and unemployment. If the central bank doubles the money supply, the price level will double too. Economists set out the classical dichotomy that economic variables come in two varieties, nominal and real, and that the things that influence nominal variables do not necessarily affect the real economy. Today few economists think that pure monetary neutrality exists in the real world, at least in the short run. Inflation does affect the real economy because, for instance, there may be sticky prices or money illusion. Related Journals of Monetary Neutrality Journal of Maritime Policy and Management, Journal of International Money and Finance, Journal of Money, Investment and Banking, Journal of Money, Credit and Banking

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