According to classical macroeconomic theory,changes in the money supply affect
A)unemployment and the price level.
B)unemployment but not the price level.
C)the price level,but not unemployment.
D)neither the price level nor unemployment.

Question

Quizplus · Accepted Answer

According to classical macroeconomic theory, changes in the money supply affect the price level but not unemployment. This is because the classical theory assumes that the economy is always at full employment in the long run, and changes in the money supply only affect the level of prices in the economy.

According to Classical Macroeconomic Theory,changes in the Money Supply Affect