In the short run, an increase in the money supply (\(\uparrow M_s\)) can stimulate aggregate demand and temporarily reduce unemployment. However, according to the Quantity Theory of Money (\(MV = PQ\)), in the long run an increase in money supply primarily leads to higher inflation (price level increases). The classical dichotomy holds that money is neutral in the long run, so real economic growth is determined by supply-side factors, not money supply.