The classical dichotomy is the separation of real and nominal variables. The following questions test your understanding of this distinction. Lucia spends all of her money on magazines and doughnuts. In 2013 she earned $15.00 per hour, the price of a magazine was $5.00, and the price of doughnut was $3.00.
The classical dichotomy is the separation of real and nominal variables. The following questions test your understanding of this distinction. Lucia spends all of her money on magazines and doughnuts. In 2013 she earned $15.00 per hour, the price of a magazine was $5.00, and the price of doughnut was $3.00.
Chapter18: Introduction To Macroeconomics: Unemployment, Inflation, And Economic Fluctuations
Section: Chapter Questions
Problem 13P
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options for blanks (please only answers that are right);
1. 0.6 doughnuts, 1.67 doughnuts, $6.00, $10.00
2. decreases, increases, remains the same,
3. decreases, increases, remains the same,
4. affects, does not affect
5. affects, does not affect
Transcribed Image Text:The classical dichotomy is the separation of real and nominal variables. The following questions test your understanding of this distinction.
Lucia spends all of her money on magazines and doughnuts. In 2013 she earned $15.00 per hour, the price of a magazine was $5.00, and the price of
a doughnut was $3.00.
Which of the following give the nominal value of a variable? Check all that apply.
Lucia's wage is $15.00 per hour in 2013.
U Lucia's wage is 3 magazines per hour in 2013.
The price of a doughnut is $3.00 in 2013.
Which of the following give the real value of a variable? Check all that apply.
The price of a magazine is 1.67 doughnuts in 2013.
Lucia's wage is $15.00 per hour in 2013.
Lucia's wage is 5 doughnuts per hour in 2013.
Suppose that the Bank of Canada sharply increases the money supply between 2013 and 2018. In 2018, Lucia's wage has risen to $30.00 per hour.
The price of a magazine is $10.00 and the price of a doughnut is $6.00.
In 2018, the relative price of a magazine is
Between 2013 and 2018, the nominal value of Lucia's wage
Monetary neutrality is the proposition that a change in the money supply
variables.
and the real value of her wage
nominal variables and
▼ real
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