In order to understand how the economy works in the short run,we need to
A)study the classical model.
B)study a model in which real and nominal variables interact.
C)understand that "money is a veil."
D)understand that money is neutral in the short run.

Question

Quizplus · Accepted Answer

Only studying a model in which real and nominal variables interact allows us to understand how the economy works in the short run. The classical model and the concepts of "money as a veil" and money neutrality are all relevant for the long run analysis of the economy, but they do not capture the dynamics of short-term fluctuations.

In Order to Understand How the Economy Works in the Short