monetary neutrality

Popular Terms
A tenet of classical economics which holds that the amount of money printed by the Federal Reserve and central banks does not directly affect GDP, the number of jobs, or the general public's consumption of goods. A rise in the money supply, however, does affect the price (i.e., the nominal variable) of goods, services, and wages.

Use 'monetary neutrality' in a Sentence

You should try to stay in a state of monetary neutrality so that you will have many different options available to you.
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Monetary neutrality helps to ensure that governmental actions do not excessively influence the free market, this also helps to provide psychological well being to market participants.
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The concept of monetary neutrality was being stress tested year after year in the USA, where the Federal Reserve was printing a historically significant amount of currency, usually not influencing GDP, however this supply was artificially inflating the stock market, which had other massive, related effects.
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