In order for changes in the money supply to affect real GDP,the aggregate supply curve cannot be vertical.

Question

Quizplus · Accepted Answer

If the aggregate supply curve is vertical, changes in the money supply will only result in higher prices and no increase in real GDP. However, if the aggregate supply curve is upward sloping, an increase in the money supply can lead to increased spending and production, resulting in higher real GDP.

In Order for Changes in the Money Supply to Affect