Classical dichotomy and monetary neutrality therefore no longer hold, since changes in nominal variables like the money supply, by shifting nominal demand, will fully be channeled into real variables while leaving the price level constant. 40) According to the classical dichotomy, which of the following is NOT influenced by monetary factors? output of goods and services produced), level of employment (i.e. The classical dichotomy is useful for analyzing the economy because in the long run nominal variables are heavily influenced by developments in the monetary system and real variables are not True In the long run, an increase in the growth rate of the money supply leads to an increase in the real interest rate, but no change in the nominal interest rate Price level D. Nominal interest rates 2-Money in the form of a commodity with intrinsic value is called A. a unit of account. Quantity of money does not influence the real variables of the system- output, employment, and the interest rate. Savings C. Nominal GDP B. Classical Monetary . 101. thefalse dichomy is accessible interior the denial of different possiblities. Get your answers by asking now. The nominal wage is influenced by monetary factors based on the classical dichotomy. a. Utility Function (MIUF) Model, etc. 101.According to the classical dichotomy, which of the following affected . 2. real interest rates. a. real GDP b. unemployment c. nominal interest rates d. All of the above are correct. The nominal wage is influenced by monetary factors based on the classical dichotomy. How do consumers make their choices according to neoclassical economic theory. Lecture Note on Classical Macroeconomic Theory Econ 135 - Prof. Bohn This course will examine the linkages between interest rates, money, output, and inflation in more detail than Mishkin’s book. C. According to the classical dichotomy, which of the following is not influenced by monetary factors? 34 tutors are online now, chat with them live. c. mostly relevant to the long run. © 2003-2020 Chegg Inc. All rights reserved. According to the classical dichotomy, which of the following is affected by monetary factors? the classical dichotomy—real variables are determined by real factors and nominal variables are determined by monetary policy. The Neutrality of Money and Classical Dichotomy! A. real wage b. real interest rate c. nominal wage d. Both a and b are correct. 105.According to the classical dichotomy, which of the following is influenced by monetary factors? According to the classical dichotomy, which of the following is largely independent of monetary factors? c. nominal GDP. • Keynesian economics harbors the thought that government intervention is essential for an economy to succeed. | D. fiat money. The classical theory of output and employment is that changes in the quantity of money affect only nominal variables (i.e. Money had a role in the economy only as a medium of exchange. Classical Dichotomy: One important conclusion from the classical model is the classical dichotomy. According to the classical dichotomy, which of the following is NOT influenced by monetary factors? A. real GDP b. unemployment c. nominal interest rates d. All of the above are correct. Sign up for solution. A. real wage b. … 74. Question 2 According to the classical dichotomy, what is NOT influenced by monetary factors? 73. A) Nominal Wages B) The Price Level C) … Keynesians and monetarists reject the classical dichotomy, because they argue that prices are sticky. a. real GDP . Join Yahoo Answers and get 100 points today. Note: In macroeconomics, the classical dichotomy refers to the idea that real and nominal variables can be analyzed separately. a.the real wage b.the real interest rate c.the nominal wage d.All of the above are correct. He thus argued that the classical dichotomy was inconsistent, in that it did not explicitly allow for this adjustment in the goods market. Topic: Classical Dichotomy Skill: Conceptual 9) The classical dichotomy means that the factors that determine the inflation rate are independent of the factors that determine A) real economic growth. According to the classical dichotomy, which of the following is not influenced by monetary factors? To be precise, an economy exhibits the classical dichotomy if real variables such as output, unemployment, and real interest rates can be completely analyzed without considering what is happening to nominal variables. Supply increases variables such as real GDP TYPE: M DIFFICULTY: 1 SECTION: 17.1 61 the! 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