Economics · Classical Macroeconomics

The irrelevance of money for real variables in the classical system is called the Classical Dichotomy. Which of the following statements correctly describe it? A. Real variables (output, employment, real wages) are determined by real factors alone. B. The money supply affects only the price level in the long run, not real variables. C. An increase in money supply raises real output in the long run. D. The dichotomy implies that monetary policy is effective in changing real GDP permanently.