According to the classical dichotomy, which of the following increases when the money supply increases?
A)the real interest rate
B)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 the price level, and do not affect real variables, such as real GDP or the real wage. Therefore, when the money supply increases, the price level also increases.

According to the Classical Dichotomy, Which of the Following Increases