According to Hume, the classical dichotomy is useful for analyzing the economy because nominal variables are heavily influenced by developments in the monetary system, and real variables are not.

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According to Hume, the classical dichotomy separates nominal variables, which are influenced by changes in the monetary system, from real variables, which are not. This separation allows for a clearer analysis of the effects of monetary policy on the economy.

According to Hume, the Classical Dichotomy Is Useful for Analyzing