Question

Changes in nominal variables are determined mostly by the quantity of money and the monetary system according to Group of answer choices both the classical dichotomy and the quantity theory of money. the classical dichotomy, but not the quantity theory of money. the quantity theory of money, but not the classical dichotomy. neither the classical dichotomy nor the quantity theory of money.

Answer 1

both the classical dichotomy and the quantity theory of money.

Step-by-step explanation:

Changes in nominal variables are determined mostly by the quantity of money and the monetary system according to both the classical dichotomy and the quantity theory of money.

The classical dichotomy is a very essential part of the quantity theory and it states that both the real and nominal sides of the economy are largely separate. A Real Gross Domestic Products which is largely a real economic variable is measured and determined by real forces.

Also, the quantity theory of money is basically a measure of the demand for money in an economy at a specific period of time. It states that the price of various goods and services is directly proportional to the money supply available in an economy at a given time.