A correctly anticipated increase in the quantity of money
A)increases the price level with no change in real GDP.
B)does not change the price level or real GDP.
C)does not change the price level but increases real GDP.
D)increases the price level and increases real GDP.
E)does not change the price level but decreases real GDP.

Question

Quizplus · Accepted Answer

A correctly anticipated increase in the quantity of money leads to a proportional increase in the price level, leaving real GDP unchanged in the long run, according to the classical dichotomy and the neutrality of money.

A Correctly Anticipated Increase in the Quantity of Money