A. Interest rate is flexible and it adjusts to maintain the equality between saving and investment. a.the real wage b.the real interest rate c.the nominal wage d.All of the above are correct. C. According to the classical dichotomy, which of the following is not influenced by monetary factors? According to the classical dichotomy, which of the following is not influenced by monetary factors? b. the price level. The Neutrality of Money and Classical Dichotomy! 1. & According To The Classical Dichotomy, Which Of The Following Is Influenced By Monetary Factors In The Long Run? Surprisingly, however, the reverse causation is not true, so that changes in the real sector do influence the monetary sector. A) Nominal Wages B) The Price Level C) … According to the classical dichotomy, which of the following is influenced by monetary factors? Question 17 (1 point) According to the classical dichotomy, what is influenced by monetary factors? In general, early theorists believed monetary factors could not affect real factors such as real output. According to the classical dichotomy, which of the following is not influenced by monetary factors? … In particular, he argued, nominal variables are heavily influenced by developments in the economy's monetary system, whereas the monetary system is largely irrelevant for understanding the determinants of important real variables. The nominal wage is influenced by monetary factors based on the classical dichotomy. For monetary policy to have persistent Classical Dichotomy: One important conclusion from the classical model is the classical dichotomy. Answer: The Classical Dichotomy refers to an assumption that says the following: in the long run, the nominal economy is completely separate from the real economy. a True. 34 tutors are online now, chat with them live. He thus argued that the classical dichotomy was inconsistent, in that it did not explicitly allow for this adjustment in the goods market. d. All of the above are correct. 73. Classical economist believe economic growth is influenced by long-term factors, such as capital and productivity. 105.According to the classical dichotomy, which of the following is influenced by monetary factors? a. real GDP . According to the classical dichotomy, which of the following is influenced by monetary factors? Lecture Note on Classical Macroeconomic Theory Econ 135 - Prof. Bohn This course will examine the linkages between interest rates, money, output, and inflation in more detail than Mishkin’s book. Money had a role in the economy only as a medium of exchange. Get the solution to your question. B. the gold standard. NAT: Analytic LOC: The role of money TOP: Classical dichotomy MSC: Definitional 105. In macroeconomics, the classical dichotomy refers to the idea that real and nominal variables can be analyzed separately. Find answers by subject and course code. 106.According to the classical dichotomy, which of the following is not influenced by monetary factors? C. commodity money. Therefore, in an economy that exhibits the classical dichotomy, the money supply only affects nominal variables like the price level. The classical view suggests that real GDP is determined by supply-side factors – the level of investment, the level of capital and the productivity of labour e.t.c. Later writers (Archibald & Lipsey, 1958) argued that the dichotomy was perfectly consistent, as it did not attempt to deal with the 'dynamic' adjustment process, it merely stated the 'static' initial and final equilibria. Privacy ... 39.According to the classical dichotomy, which of the following is influenced by monetary factors? Classical dichotomy is a view of classical economics that presumes that output, employment, and other such factors which are termed real variables, must be independent of financial variables. Savings B. Nominal GDP C. Price level D. Nominal interest rates 2.-As the average price level in the economy falls, people will A. use less money as a medium of exchange. If the GDP says we're out of recession because our economy is able to sustain itself without immigration, why shouldn't we cut immigration? Not yet answered Marked out of 1.00 Select one: a. the real wage rate P Flag question o b. the nominal GDP C. the nominal interest rate o d. the price level production the interest rate adjusted for inflation the current-dollar wage the constant-dollar GDP Money was, however, given driving seat in That is, they think prices fail to adjust in the short run, so that an increase in the money supply raises aggregate demand and thus alters real macroeconomic variables. a. the real wage b. the real interest rate c. the nominal wage d. All of the above are correct. According to the classical dichotomy, which of the following is influenced by monetary factors? Tile separation of real and nominal variables is now called the classical dichotomy. A. real wage b. real interest rate c. nominal wage d. Both a and b are correct. Get your answers by asking now. The Classical quantity theory of money maintains a dichotomy between the monetary sector and the real sector. How do consumers make their choices according to neoclassical economic theory. According to the classical dichotomy, which of the following is not influenced by monetary factors? output of goods and services produced), level of employment (i.e. On the other hand, the price level determined in the real sector is known as relative price level (price of one product in terms of other product). In macroeconomics, the classical dichotomy is the idea, attributed to classical and pre-Keynesian economics, that real and nominal variables can be analyzed separately. ____ 145. However, many of the classical economists rejected this notion and believed short-term factors, such as price stickiness or depressed business confidence, were sources of non-neutrality. a. nominal GDP and nominal interest rates b. real wages and real GDP c. the price level and nominal GDP d. None of the above is correct. An economy exhibits the classical dichotomy if money is superneutral; it is also likely to be quantitatively close to the classical dichotomy if money is neutral. Ans: B . In macroeconomics, the classical dichotomy is the idea, attributed to classical and pre-Keynesian economics, that real and nominal variables can be analyzed separately. According to the classical dichotomy, which of the following is not influenced by monetary factors? Question : 101.According to the classical dichotomy, which of the following affected : 1485865 101. 40) According to the classical dichotomy, which of the following is NOT influenced by monetary factors? Don Patinkin (1954) challenged the classical dichotomy as being inconsistent, with the introduction of the 'Real balance effect' of changes in the nominal money supply. Not my Question Bookmark. false. demand for money that is eliminated by falling prices. Lucasâ s monetary business cycle theory contains a refined version of the classical dichotomy. The view in classical economics and neoclassical economics that real variables in the economy are determined purely by real factors and not by monetary factors, and nominal variables are determined purely by monetary factors and not by real ones. A. 3. In its maximum consumer-friendly style, 2 entities are offered as though they are exhaustive, whilst in certainty different possibilities are achieveable. An increase in the money supply raises the absolute price level without affecting relative prices which are determined in the real sector. Of the above are correct Multiple Choice: according to the classical dichotomy, which of the following is influenced., classical dichotomy influenced by monetary factors nominal variables ( i.e called the classical dichotomy, the money raises. By … classical view of long run aggregate supply and long run irrelevant to Both the short.! Influence on output, which of the following is not influenced by monetary forces yet there is no real on! 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