Chapter 12 Key Terms Flashcards
1
Q
quantity theory of money
A
A theory that the quantity of money avalible determines the price level and that the growth rate in the quantity of money avalible determines the inflation rate.
2
Q
nominal variables
A
variables measured in monetary units
3
Q
Real variables
A
variables measured in physical units
4
Q
classical dichotomy
A
the theoretical separation of nominal and real variables
5
Q
monetary neutrility
A
the proposition that changes in the money supply do not affect real variables
