A Classical Dichotomy Refers to the Fact That

question 32

Multiple Choice

A classical dichotomy refers to the fact that

• A) the real variables in the model are determined independently of the money market.
• B) the real variables are jointly determined depending on what happens in the money market.
• C) real and nominal variables are often different.
• D) the real interest rate differs from the nominal interest rate.
• E) classical theory predicts negative effects of high inflation.

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