The principle of monetary neutrality implies that an increase in the money supply will
A. increase real GDP and the price level.
B. increase real GDP, but not the price level.
C. increase the price level, but not real GDP.
D. increase neither the price level nor real GDP.
Answer:C
The principle of monetary neutrality implies that an increase in the money supply will
A. increase real GDP and the price level.
 B. increase real GDP, but not the price level.
 C. increase the price level, but not real GDP.
 D. increase neither the price level nor real GDP.
