The classical dichotomy and the neutrality of money The classical dichotomy is the separation of real and nominal variables. The following questions test your understanding of this distinction. Dina spends all of her money on comic books and mandarins. In 2015, she earned $15.00 per hour, the price of a comic book was $5.00, and the price of a mandarin was $3.00. Which of the following give the nominal value of a variable?
a) The price of a comic book is $5.00 in 2015.
b) Dina's wage is 5 mandarins per hour in 2015.
c) Dina's wage is $15.00 per hour in 2015.
d) Suppose that the Fed sharply increases the money supply between 2015 and 2020. In 2020,
e) Dina's wage has risen to $30.00 per hour.
f) The price of a comic book is $10.00 and the price of a mandarin is $6.00.
g) In 2020, the relative price of a comic book is . Between 2015 and 2020, the nominal value of
h) Dina's wage , and the real value of her wage .
i) Monetary neutrality is the proposition that a change in the money supply nominal variables and real variables.
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