According to the classical dichotomy, what changes nominal variables? What changes real variables?
The classical dichotomy argues that nominal variables are determined primarily by developments in the monetary system such as changes in money demand and supply. Real variables are largely independent of the monetary system and are determined by productivity and real changes in the factor and loanable funds markets.
You might also like to view...
Everything else held constant, which of the following does NOT cause aggregate demand to increase?
A) an increase in net exports B) an increase in government spending C) an increase in taxes D) an increase in consumer optimism
A monopoly industry: a. has very significant barriers to entry
b. faces a downward sloping demand curve. c. may earn economic profits or losses in the short run. d. has all of the above characteristics.
When pollution emissions can be measured, taxation will tend to be more effective than any other method of controlling pollution.
Answer the following statement true (T) or false (F)
Suppose that the market price for hot dogs sold by street vendors has just risen from $4.50 to $5.00, and that in response Curly has now begun operating a hot dog cart. We can assume that Curly's reservation price for hot dogs is:
A. $4.50. B. at least $5.00. C. greater than $4.50 but no more than $5.00. D. $5.00.