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If money is neutral, 1. an increase in the money supply does nothing. 2. a change in the money supply only affects nominal variables such
If money is neutral,
- 1. an increase in the money supply does nothing.2.a change in the money supply only affects nominal variables such as prices and wages.3. a change in the money supply only affects real variables such as real output.4.a change in the money supply reduces velocity proportionately; therefore there is no effect on either prices or real output.
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