Business, 07.05.2020 13:57 sheila54

Most economists believe that real economic variables and nominal economic variables behave independently of each other in the long run.

For example, an increase in the money supply, a (real/nominal) variable, will cause the price level, a (real/nominal) variable, to increase but will have no long-run effect on the quantity of goods and services the economy can produce, a (real/nominal) variable. The distinction between real variables and nominal variables is known as the (price neutrality/monetary neutrality/the quantity theory).

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