According to the classical dichotomy, which of the following increases when the money supply increases?

A) The real interest rate
B) The real GDP
C) The real wage
D) The nominal wage

Classical Dichotomy

A concept in economics that separates real variables, which are quantities or measures not adjusted for inflation, from nominal variables, which are adjusted for inflation.

Real GDP

A measure of the value of all goods and services produced within a country over a specific time period, adjusted for inflation.

Nominal Wage

The wage paid to employees in current dollars, without adjustment for inflation, reflecting the actual amount of money received.