In the long run, changes in the money supply:
A) don't affect the interest rate.
B) lower the interest rate.
C) raise the interest rate.
D) have a small but indeterminate impact on the interest rate.

Question

Quizplus · Accepted Answer

In the long run, changes in the money supply do not affect the interest rate according to the classical dichotomy. The classical dichotomy suggests that real variables, like the interest rate, are not affected by monetary variables in the long run.

In the Long Run, Changes in the Money Supply