In the monetary intertemporal model, assume that money supply is always fixed. Suppose that there is an increase in real wage. How does this change affect interest rates (both real and nominal), price level, employment, total factor productivity and equilibrium output? Carefully explain your answers.

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Q: According to the quantity theory, if constant growth in the money supply is combined with…

A: An important theory of macroeconomics that relates the money supply in an economy and the price…

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