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    Question

    Separation of real and nominal variables of classical

    theory is called _____.
    A Monetary Neutrality Correct Answer Incorrect Answer
    B Phillips Curve Correct Answer Incorrect Answer
    C Classical Dichotomy Correct Answer Incorrect Answer
    D Quantity Theory Correct Answer Incorrect Answer

    Solution

    The separation of real and nominal variables in classical theory is known as Monetary Neutrality. This concept posits that changes in the money supply only affect nominal variables (like prices and wages) and not real variables (like output and employment) in the long run.

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