In the long run, according to the quantity theory of money and classical macroeconomic theory, if velocity is constant, then _____ determines real GDP and _____ determines nominal GDP.

Question

Quizplus · Accepted Answer

In the long run, real GDP is determined by the productive capability of the economy, while nominal GDP is determined by the money supply, given a constant velocity of money.

In the Long Run, According to the Quantity Theory of Money