What does the term money neutrality mean? Changes in the money supply impact everyone in an economy in a similar way. Because the Federal Reserve is relatively free from oversight, it can take actions that are unpopular if they are in the best interest of the country. Changes in the money supply and the price level are inversely related and proportional, meaning that a 10% increase in the money supply decreases prices by exactly 10%. Changes in the money supply have no real effects on the economy in the long run. If money is neutral, what does this imply about the use of monetary policy? Mechanisms should be introduced to ensure that the Federal Reserve is making sound decisions. Monetary policy is more effective in the short term than the long term. O Monetary policy can influence the price level but cannot be used to encourage economic growth.