The idea that nominal variables are heavily influenced by the quantity of money and that money is largely irrelevant for understanding the determinants of real variables is called the
A)velocity concept.
B)Fisher effect.
C)classical dichotomy.
D)Mankiw effect.

Question

Quizplus · Accepted Answer

The classical dichotomy is the idea that real and nominal variables can be analyzed separately, as nominal variables (such as prices and nominal wages) are largely determined by the quantity of money, while real variables (such as output and employment) are determined by real factors such as technology and preferences. This concept is a key feature of classical economic theory. The other answer choices do not accurately describe this concept.

The Idea That Nominal Variables Are Heavily Influenced by the Quantity