3. 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. Yesmina divides all of her income between spending on digital movie rentals and Americanos. In 2017, she earned an hourly wage of $28.00, the pric of a digital movie rental was $7.00, and the price of a Americano was $4.00. Which of the following give the real value of a variable? Check all that apply. The price of a digital movie rental is $7.00 in 2017. The price of a digital movie rental is 1.75 Americanos in 2017. Yesmina's wage is 7 Americanos per hour in 2017. Which of the following give the nominal value of a variable? Check all that apply. The price of a Americano is 0.57 digital movie rentals in 2017. The price of a Americano is $4.00 in 2017. Yesmina's wage is $28.00 per hour in 2017. Suppose that the Fed sharply increases the money supply between 2017 and 2022. In 2022, Yesmina's wage has risen to $56.00 per hour. The price of a digital movie rental is $14.00 and the price of a Americano is $8.00. In 2022, the relative price of a digital movie rental is Between 2017 and 2022, the nominal value of Yesmina's wage Monetary neutrality is the proposition that a change in the money supply variables. and the real value of her wage " nominal variables and real

3. 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. Poornima spends all of her money on magazines and donuts. In 2015, she earned $27.00 per hour, the price of a magazine was $9.00, and the price of a donut was $3.00. Which of the following give the nominal value of a variable? Check all that apply. O The price of a donut is $3.00 in 2015. O Poornima's wage is $27.00 per hour in 2015. O The price of a donut is 0.33 magazines in 2015. Which of the following give the real value of a variable? Check all that apply. O The price of a magazine is 3 donuts in 2015. O Poornima's wage is 9 donuts per hour in 2015. O The price of a magazine is $9.00 in 2015. Suppose that the Fed sharply increases the money supply between 2015 and 2020. In 2020, Poornima's wage has risen to $54.00 per hour. The price of a magazine is $18.00 and the price of a donut is…

2. How does a very high rate of inflation affect individual spending and saving? Explain your answer.

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