If real GDP depends only on capital, labor, and technology, an increase in the money supply will lead to
A)an increase in real GDP.
B)an increase in the price level.
C)a decline in real GDP.
D)a decrease in the price level.
E)no predictable change in the price level or real GDP.

Question

Quizplus · Accepted Answer

An increase in the money supply typically leads to an increase in the price level due to inflationary pressures, as more money chases the same amount of goods and services, without directly affecting real GDP, which is determined by capital, labor, and technology.

If Real GDP Depends Only on Capital, Labor, and Technology