In Classical Employment Theory, the increase in money supply will:
A. Increase in National Output
B. Increase in Price Level
C. Decrease in Wage Rate
D. Improvement in Technology and Knowledge
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2 marksMacroeconomicsClassical macroeconomicsClassical dichotomy, money neutrality and the Pigou effectModerateabout 1 min
UGC-NET 2026 Question 32: Classical macroeconomics
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Classical macroeconomics has come up 35 times in 7 exams since 2008.
What this question tests
This question is on Classical dichotomy, money neutrality and the Pigou effect, part of Classical macroeconomics in Macroeconomics.
Why money affects only the price level in the classical model, and how falling prices could restore full employment.
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