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Figure: Classical Model of the Price Level
-(Figure: Classical Model of the Price Level) Look at the figure Classical Model of the Price Level. If the central bank increases the money supply such that aggregate demand shifts from AD₁ to AD₂, according to this classical model, real GDP will:

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Figure: Classical Model of the Price Level

-(Figure: Classical Model of the Price Level) Look at the figure Classical Model of the Price Level. If the central bank increases the money supply such that aggregate demand shifts from AD₁ to AD₂, according to this classical model, real GDP will:

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In the classical model, real GDP is determined by factors of production and technology, not by the money supply. An increase in money supply affects only the price level, not real GDP.

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