Answer to Question #313184 in Macroeconomics for captain nyagah

Question

Demonstrate that money is neutral in the long-run, but not in the short run in the Keynesian model

Answer 1

In the Keynesian model, cash isn't neutral in the short run, however it is neutral over the long run. In the short run, an expansion in the cash supply increases yield and the real interest fee, while the value level and real wage are unaltered.