According to the classical dichotomy, what is NOT influenced by monetary factors?
A) the price level
B) real GDP
C) nominal interest rates
D) nominal GDP

Question

Quizplus · Accepted Answer

According to the classical dichotomy, real GDP is not influenced by monetary factors. The classical dichotomy theory states that the real economy and the nominal economy can be analyzed separately, with monetary factors affecting only the nominal economy. Real GDP is a measure of the economy's output in physical units, while monetary factors such as changes in the money supply or interest rates impact only the price level and other nominal variables.

According to the Classical Dichotomy, What Is NOT Influenced by Monetary