According to classical economic theory, which of the following do changes in the money supply affect?
A) real GDP
B) real interest rates
C) the price level
D) unemployment

Question

Quizplus · Accepted Answer

Classical economic theory states that changes in the money supply only affect the price level, as shifts in the money supply can lead to inflation or deflation. Changes in real GDP, real interest rates, and unemployment are determined by factors such as productivity, technology, and labor market conditions, which are independent of the money supply.

According to Classical Economic Theory, Which of the Following Do