Final answer:
An increase in real GDP according to the quantity theory of money would increase the real value of money and reduce the price level if the velocity of money is constant and other factors are held constant.
Step-by-step explanation:
According to the quantity theory of money, an increase in real GDP, other things equal, would typically lead to a decrease in the price level. This theory posits that if the velocity of money is constant, an increase in money supply would lead to a proportionate increase in nominal GDP. However, if the increase in nominal GDP comes from an increase in real GDP rather than inflation, the real value of money would increase because there would be more goods and services in the economy to spend the same amount of money on.
Thus, under these assumptions, an increase in real GDP with other factors held constant would increase the real value of money and reduce the price level, as the same amount of money circulating in the economy would be chasing a larger number of goods and services, leading to lower prices. Therefore, the correct answer would be (a) increase the real value of money and reduce the price level.