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Macroeconomics

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Moderate

Classical approach & money

MACRO-XJHV1E

According to Classical economists, money is a procyclical macroeconomic variable because

A

increasing the money supply increases aggregate demand

B

money is neutral, and changes in the nominal money supply do not affect real variables

C

when money demand rises because of a beneficial productivity shock, the Fed increases the money supply to keep the interest rate unchanged

D

increasing the money supply shifts the LM curve, reducing real interest rates and causing an economic expansion

E

None of the above