Homework (Ch 17) Attempts Keep the Highest / 5 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. Taia divides all of her income between spending on paperbacks and Americanos. In 2016, she earned an hourly wage of $28.00, the price of a paperback 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 paperback is $7.00 in 2016. The price of a paperback is 1.75 Americanos in 2016. Taia's wage is 7 Americanos per hour in 2016. Which of the following give the nominal value of a variable? Check all that apply. The price of a Americano is 0.57 paperbacks in 2016. The price of a Americano is $4.00 in 2016. Taia's wage is $28.00 per hour in 2016. Suppose that the Fed sharply increases the money supply between 2016 and 2021. In 2021, Taia's wage has risen to $56.00 per hour. The price of a paperback is $14.00 and the price of a Americano is $8.00. In 2021, the relative price of a paperback is Between 2016 and 2021, the nominal value of Taia's wage , and the real value of her wage Monetary neutrality is the proposition that a change in the money supply nominal variables and real variables