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neutrality of money

Bible DictionaryEuropean Central Bank Dictionary
A basic economic principle stating that in the long run changes in the money supply only lead to changes in nominal variables but not in real variables. Changes in the money supply will therefore have no long-term effect on variables such as real output, unemployment or real interest rates.
Copyright © 2006, European Central Bank, Frankfurt am Main, Germany. This information may be obtained free of charge through the ECB's website.

 

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