According to the quantity theory of money,a change in the money supply affects:
A) real GDP in the short run but not in the long run.
B) real GDP in the long run but not in the short run.
C) nominal GDP in the short run but not in the long run.
D) nominal GDP in the long run but not in the short run.

Question

Quizplus · Accepted Answer

In the short run, changes in the money supply can affect real GDP due to price and wage stickiness. However, in the long run, the economy is expected to return to its potential output, and changes in the money supply primarily affect nominal variables like the price level, not real GDP.

According to the Quantity Theory of Money,a Change in the Money