Testing the hypothesis of the Monetary neutrality and the effect of money expansion on the gross domestic product: Case of Egyptian economy (during 2011-2021)

The research tested the hypothesis of non-neutrality of money through the effect of the amount of money supplied on the GDP by applying to the state of the Egyptian economy in an attempt to ascertain the extent of the influence of the amount of money supplied on the components of effective aggregate demand, then the relationship of GDP to aggregate demand, and then determining the effect of the amount of money displayed on GDP in the short run. The research was based on (1) that the increase in the money supply affects the components of aggregate demand, but to varying degrees. (2) That components of aggregate demand are affected by factors other than the money supply. (3) That GDP does not respond quickly to changes in aggregate demand. By using the descriptive approach and the experimental method, and selecting a number of explanatory variables, the results showed the validity of the three assumptions. Accordingly, the research recommended that the quantity supplied of money be increased with caution and that the rate of money circulation should be taken into account and that it be done gradually, Attention must also be paid to the determinants of aggregate supply so that the productive system can respond to the  Economic Stimulus of aggregate demand.