If the Classical Dichotomy Holds a Change in Monetary Policy

question 52

Multiple Choice

If the classical dichotomy holds a change in monetary policy, it ________ and ________.

• A) increases employment; reduces taxes
• B) has no real effects; only affects nominal variables
• C) changes output; has no influence on inflation
• D) will reduce unemployment; cannot increase inflation
• E) has no nominal effects; only moves real variables

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Definitions:

Exponentiation

The mathematical operation involving the raising of one number to the power of another.

Division

A mathematics operation where a number is divided into parts or segments, represented by the division sign (/ or ÷).

Division

A fundamental mathematical operation that represents the process of dividing one number by another.

Exponentiation

A mathematical operation involving the raising of a base to the power of an exponent, symbolizing repeated multiplication.