According to the principle of monetary neutrality, a decrease in the money supply will not change a. nominal gdp. b. the price level. c. unemployment. d. the value of money

The correct answer is B

Explanation:

The principle of monetary neutrality, is the one which means that the change in the stock of the money that affects only nominal variables in the economy like the exchange rate, prices, wages, with have no effect on the real variables such as the real GDP, real consumption and the employment.

The monetary neutrality is defined as the change in the money supply, will only affect the one variable, the price level and real GDP is not impacted.

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