Macroeconomics 1st Edition by Dean Karlan,Jonathan Morduch

Exercise 18

Your uncle comes to you with an investment idea. He tells you that the nominal GDP of Paradisia quadrupled over the past year and suggests that you invest there. Unemployment is at 20 percent, and inflation over the last year was 500 percent. Do you think it's a good idea to invest? Draw on the neutrality theory of money to explain why or why not.