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Real Business Cycle Theorists Strongly Believe in the Classical Dichotomy

Question 16

Multiple Choice

Real business cycle theorists strongly believe in the classical dichotomy:


A) real fundamentals effectively determine the values of real quantities like GDP even in the short run, and nominal variables (like the money stock) determine the values of nominal quantities (like the price level) .
B) nominal fundamentals effectively determine the values of nominal quantities like GDP even in the short run, and real variables (like the money stock) determine the values of real quantities (like the price level) .
C) real fundamentals effectively determine the values of real quantities like (like the price level) even in the short run, and nominal variables (like the money stock) determine the values of nominal quantities (like GDP) .
D) demand creates its own supply.

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