3. 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. Ginny spends all of her money on magazines and donuts. In 2015, she earned $14.00 per hour, the price of a magazine 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. The price of a donut is 0.29 magazines in 2015. O Ginny's wage is 2 magazines per hour in 2015. O The price of a donut is $2.00 in 2015. Which of the following give the real value of a variable? Check all that apply. The price of a magazine is $7.00 in 2015. O Ginny's wage is $14.00 per hour in 2015. O The price of a magazine is 3.5 donuts in 2015. Suppose that the Fed sharply increases the money supply between 2015 and 2020. In 2020, Ginny's wage has risen to $28.00 per hour. The price of a magazine is $14.00 and the price of a donut is $4.00. In 2020, the relative price of a magazine is and the real value of her wage Between 2015 and 2020, the nominal value of Ginny's wage Monetary neutrality is the proposition that a change in the money supply nominal variables and real variables.
3. 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. Ginny spends all of her money on magazines and donuts. In 2015, she earned $14.00 per hour, the price of a magazine 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. The price of a donut is 0.29 magazines in 2015. O Ginny's wage is 2 magazines per hour in 2015. O The price of a donut is $2.00 in 2015. Which of the following give the real value of a variable? Check all that apply. The price of a magazine is $7.00 in 2015. O Ginny's wage is $14.00 per hour in 2015. O The price of a magazine is 3.5 donuts in 2015. Suppose that the Fed sharply increases the money supply between 2015 and 2020. In 2020, Ginny's wage has risen to $28.00 per hour. The price of a magazine is $14.00 and the price of a donut is $4.00. In 2020, the relative price of a magazine is and the real value of her wage Between 2015 and 2020, the nominal value of Ginny's wage Monetary neutrality is the proposition that a change in the money supply nominal variables and real variables.
Chapter1: Making Economics Decisions
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Transcribed Image Text:3. 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.
Ginny spends all of her money on magazines and donuts. In 2015, she earned $14.00 per hour, the price of a magazine 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.
The price of a donut is 0.29 magazines in 2015.
O Ginny's wage is 2 magazines per hour in 2015.
O The price of a donut is $2.00 in 2015.
Which of the following give the real value of a variable? Check all that apply.
The price of a magazine is $7.00 in 2015.
O Ginny's wage is $14.00 per hour in 2015.
O The price of a magazine is 3.5 donuts in 2015.
Suppose that the Fed sharply increases the money supply between 2015 and 2020. In 2020, Ginny's wage has risen to $28.00 per hour. The price of a
magazine is $14.00 and the price of a donut is $4.00.
In 2020, the relative price of a magazine is
and the real value of her wage
Between 2015 and 2020, the nominal value of Ginny's wage
Monetary neutrality is the proposition that a change in the money supply
nominal variables and
real
variables.
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