According to classical macroeconomic theory, what does money growth influence in the long run?
A) both real and nominal variables
B) the unemployment rate and output
C) only real variables
D) only nominal variables

Question

Quizplus · Accepted Answer

According to classical macroeconomic theory, in the long run, money growth influences only nominal variables, such as the price level or inflation, but does not affect real variables like real GDP or unemployment. This is encapsulated in the classical dichotomy and the neutrality of money.

According to Classical Macroeconomic Theory, What Does Money Growth Influence