Which of the following ideas does the classical dichotomy refers to?
A)The supply of money is irrelevant for understanding the determinants of nominal and real variables.
B)The supply of money determines nominal variables, but not real variables.
C)The supply of money determines real variables, but not nominal variables.
D)The supply of money is a determinant of both real and nominal variables.

Question

Quizplus · Accepted Answer

The classical dichotomy suggests that nominal variables are influenced by the money supply, while real variables are not, separating the two in economic analysis.

Which of the Following Ideas Does the Classical Dichotomy Refers