According to the classical dichotomy,which of the following increases when the money supply increases?
A)the real interest rate
B)the real GDP
C)the real wage
D)the price level

Question

Quizplus · Accepted Answer

According to the classical dichotomy, changes in the money supply only affect nominal variables, such as prices, but do not affect real variables, such as real GDP, real interest rates, and real wages. Therefore, when the money supply increases, the price level is expected to increase, but the real interest rate, real GDP, and real wage remain unchanged.

According to the Classical Dichotomy,which of the Following Increases When