The idea that a change in the money supply would affect prices but not real GDP is associated with the
A) monetary equivalence theory.
B) law of unintended consequences.
C) classical monetary transmission mechanism.
D) liquidity trap.

Question

Quizplus · Accepted Answer

The classical monetary transmission mechanism posits that changes in the money supply affect prices but not real GDP in the long run, aligning with classical economic theory which suggests that the economy is self-correcting and that money is neutral in terms of real economic variables like output.

The Idea That a Change in the Money Supply Would