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Business, 07.04.2020 21:29 Feiee1

Suppose that the Fed sharply increases the money supply between 2012 and 2017. In 2017, Valerie's wage has risen to $30.00 per hour. The price of a magazine is $10.00 and the price of a donut is $6.00. In 2017, the relative price of a magazine is 1.67 donuts. Between 2012 and 2017, the nominal value of Valerie's wage increases, and the real value of her wage remains the same. Monetary neutrality is the proposition that a change in the money supply affects nominal variables anddoes not affect real variables. True / False.

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Suppose that the Fed sharply increases the money supply between 2012 and 2017. In 2017, Valerie's wa...
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