Final answer:
According to the classical dichotomy theory, when the money supply doubles, the price level also doubles, with no effect on real variables like real income or real interest rates.
Step-by-step explanation:
According to the classical dichotomy theory, when the money supply doubles, the price level also doubles. This theory separates real and nominal variables in the economy, with real variables not being affected by changes in the money supply and nominal variables being directly proportional to the money supply. When central banks increase the money supply, it does not affect real variables like real income, real interest rates, or output in the long run; however, nominal variables like the price level are directly affected, which in this case, would double, assuming all other factors remain the same.