According to real business cycle (RBC) theory, a change in the quantity of money leads to
A) a change in the price level and in real GDP.
B) a change in the price level but no change in real GDP.
C) a change in investment and real GDP.
D) a change in the real wage rate and the money wage rate.

Question

Quizplus · Accepted Answer

RBC theory posits that real economic variables are not affected by changes in the money supply. According to this theory, a change in the quantity of money would only affect nominal variables like the price level, not real variables like real GDP.

According to Real Business Cycle (RBC) Theory, a Change in the Quantity