Question

he **classical dichotomy** is the separation of
real and nominal variables. The following questions test your
understanding of this distinction.

Dina spends all of her money on paperback novels and donuts. In 2012, she earned $14.00 per hour, the price of a paperback novel was $7.00, and the price of a donut was $2.00.

Which of the following give the **nominal** value
of a variable? *Check all that apply.*

Dina's wage is $14.00 per hour in 2012.

The price of a donut is 0.29 paperback novels in 2012.

Dina's wage is 2 paperback novels per hour in 2012.

Which of the following give the **real** value of a
variable? *Check all that apply.*

Dina's wage is 7 donuts per hour in 2012.

The price of a paperback novel is $7.00 in 2012.

Dina's wage is $14.00 per hour in 2012.

Suppose that the Fed sharply increases the money supply between 2012 and 2017. In 2017, Dina's wage has risen to $28.00 per hour. The price of a paperback novel is $14.00 and the price of a donut is $4.00.

In 2017, the relative price of a paperback novel is **(.29
donuts, 3.5 donuts, $4, or $14) ** .

Between 2012 and 2017, the nominal value of Dina's wage
**(decreases,increases, or remains the same)** , and
the real value of her wage **(decreases,increases, or remains
the same)** .

Monetary neutrality is the proposition that a change in the
money supply **(affects, does not affect)** nominal
variables and **(affects, does not affect)** real
variables.

Answer #1

Nominal values are stated in monetary terms.

Real values are stated in commodity terms.

Following give the nominal value of a variable -

**Dina's wage is $14 per hour
in 2012.**

Following gives the real value of a variable -

**Dina's wage is 7 donuts per
hour in 2012.**

In 2017, price of a paperback novel is $14 and the price of a donut is $4.

**In 2017, the relative price
of a paperback novel is (4/14) 0.29 donuts**.

**Between 2012 and 2017, the
nominal value of Dina's wage increases, and the real value
of her wage remains the
same.**

**Monetary neutrality is the
preposition that a change in the money supply affects nominal variables and
does not affect
real variables.**

The classical dichotomy and the neutrality of
money
The classical dichotomy is the separation of real and nominal
variables. The following questions test your understanding of this
distinction.
Maria spends all of her money on paperback novels and donuts. In
2012, she earned $14.00 per hour, the price of a paperback novel
was $7.00, and the price of a donut was $2.00.
1) Which of the following give the nominal value of a variable?
Check all that apply.
a)The price...

The classical dichotomy and the neutrality of
money
The classical dichotomy is the separation of real and nominal
variables. The following questions test your understanding of this
distinction.
Rina spends all of her money on comic books and donuts. In 2011,
she earned $15.00 per hour, the price of a comic book was $5.00,
and the price of a donut was $3.00.
Which of the following give the nominal value of a variable?
Check all that apply.
The price of...

According to classical macroeconomic theory, changes in the
money supply affect
nominal variables and real variables.
nominal variables, but not real variables.
real variables, but not nominal variables.
neither nominal nor real variables.
The sticky-wage theory of the short-run aggregate supply curve
says that when the price level rises more than expected,
production is more profitable and employment rises.
production is more profitable and employment falls.
production is less profitable and employment rises.
production is less profitable and employment falls....

_________GDP is the total value of production? (final goods and?
services) using current prices.
Consider an illustrative economy that produces luxury pens.
Assume that in 2012 this economy produced 30
luxury pens at a market price of $300 per pen. In 2013?, the
number of luxury pens produced remains the same but the market
price has increased to
?$400 per pen. If 2012 is the base? year, the real GDP in 2013
is $________
The nominal GDP in 2013 has...

1. Use the money market and foreign exchange (FX) diagrams to
answer the following questions. This question considers the
relationship between the euro (e) and the U.S. dollar ($). Let the
U.S. be “Home” and the European Monetary Union (EMU) be “Foreign”.
Let the exchange rate be defined as U.S. dollars per euro, E$/e.
Assume, for simplicity, that European money supply, M∗ , liquidity
preferences L ∗ , price level P ∗ , nominal and real interest
rates, i ∗...

answer the following questions
Q21.When the economy experiences an
expansion, it is most likely the case
that-------------------------------
GDP is increasing, unemployment is increasing, and inflation is
decreasing.
GDP is increasing, unemployment is decreasing, and inflation is
increasing.
GDP is decreasing, unemployment is decreasing, and inflation is
increasing.
GDP is decreasing, unemployment is decreasing, and inflation is
decreasing.
Q22. GDP is an important economic measurement because
it
provides valuable data on unemployment rates
measures the combined total of all intermediate and...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 5 minutes ago

asked 8 minutes ago

asked 22 minutes ago

asked 37 minutes ago

asked 53 minutes ago

asked 57 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago