Macroeconomics
10th Edition
ISBN: 9781319105990
Author: Mankiw, N. Gregory.
Publisher: Worth Publishers,
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Question
Chapter 5, Problem 7QR
To determine
The real variables and the nominal variables.
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What is the difference between nominal and real variables? Give two examples of each.
The classical dichotomy is the separation of real and nominal variables. The following questions test your understanding of this distinction.
Lucia spends all of her money on comic books and beignets. In 2012, she earned $15.00 per hour, the price of a comic book was $5.00, and the price of a beignet was $3.00.
Which of the following give the nominal value of a variable? Check all that apply.
a. Lucia's wage is 3 comic books per hour in 2012.
b. Lucia's wage is $15.00 per hour in 2012.
c. The price of a beignet is 0.6 comic books in 2012.
Which of the following give the real value of a variable? Check all that apply.
a. Lucia's wage is $15.00 per hour in 2012.
b. Lucia's wage is 5 beignets per hour in 2012.
c. The price of a comic book is $5.00 in 2012.
Suppose that the Fed sharply increases the money supply between 2012 and 2017. In 2017, Lucia's wage has risen to $30.00 per hour. The price of a comic book is $10.00 and the price of a beignet is $6.00.…
Which of the following is an example of a nominal variable?
A.) Output
B.) Employment
C.) Prices
D.) Physical capital
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