An increase in the money supply:
A)can not affect real variables temporarily in the short run.
B)can affect real variables in the long run.
C)can affect nominal variables in the long run.
D)all of the above.

Question

Quizplus · Accepted Answer

An increase in the money supply primarily affects nominal variables in the long run, such as the price level or the nominal value of wages, rather than real variables like real GDP or the unemployment rate, according to the classical dichotomy and the neutrality of money.

An Increase in the Money Supply