According to classical macroeconomic theory,in the long run
A)monetary growth affects both real and nominal variables.
B)the only real variable affected by monetary growth is the unemployment rate.
C)a number of factors that affect unemployment are influenced by monetary growth.
D)monetary growth affects nominal but not real variables.

Question

Quizplus · Accepted Answer

According to classical macroeconomic theory, in the long run, monetary growth affects only nominal variables and not real variables. This is because classical theory assumes that changes in the money supply do not affect the economy's productive capacity but only affect the price level. Real variables, such as output and employment, are determined by factors such as technology and labor supply, which are outside the realm of monetary policy.

According to Classical Macroeconomic Theory,in the Long Run