Question

The classical dichotomy is the separation of real and nominal variables. The following questions test your understanding of this distinction.Maria spends all of her money on paperback novels and beignets. In 2011 she earned $27.00 per hour, the price of a paperback novel was $9.00, and the price of a beignet was $3.00.1. Which of the following give the nominal value of a variable? Check all that apply.a. The price of a beignet is $3.00 in 2011.b. Maria's wage is $27.00 per hour in 2011.c. The price of a beignet is 0.33 paperback novels in 2011.2. Which of the following give the real value of a variable? Check all that apply.a. The price of a paperback novel is 3 beignets in 2011.b. Maria's wage is 9 beignets per hour in 2011.c. The price of a paperback novel is $9.00 in 2011.

Answer 1

Answer: Please refer to Explanation

Explanation:

Classical Dichotomy refers to the idea that real variables such as income and output are independent of monetary Values. That money only helps increase transactional efficiency.

This concept separates Nominal and Real Variables by positing that Nominal Variables can be measured in dollar terms but Real Variables are measured in physical terms.

1)Which of the following give the nominal value of a variable? Check all that apply.

Remember. They should be in dollar terms.

So the answers will be,

a. The price of a beignet is $3.00 in 2011.✔️

b. Maria's wage is $27.00 per hour in 2011.✔️

c. The price of a beignet is 0.33 paperback novels in 2011❌ (NOT NOMINAL VALUE)

2. Which of the following give the real value of a variable?

Check all that apply.

Physical terms now.

a. The price of a paperback novel is 3 beignets in 2011.✔️

b. Maria's wage is 9 beignets per hour in 2011.✔️

c. The price of a paperback novel is $9.00 in 2011.❌ (NOT REAL VALUE AS IT IS IN DOLLAR TERMS)