Asked by Martevus Blount on Jun 12, 2024
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Changes in nominal variables are determined mostly by the quantity of money and the monetary system according to
A) both the classical dichotomy and the quantity theory of money.
B) the classical dichotomy, but not the quantity theory of money.
C) the quantity theory of money, but not the classical dichotomy.
D) neither the classical dichotomy nor the quantity theory of money.
Classical Dichotomy
The theoretical separation of nominal and real variables in classical economics, implying that monetary changes do not affect real economic variables.
Quantity Theory
A theory in economics that asserts the general price level of goods and services is directly proportional to the amount of money in circulation, or money supply.
- Understand the fundamentals of classical dichotomy and the Fisher effect, along with their impact on nominal and real variables.
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Learning Objectives
- Understand the fundamentals of classical dichotomy and the Fisher effect, along with their impact on nominal and real variables.
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