Which of the following is a feature of the Classical dichotomy?
A. Wages and prices are sticky
B. Money is neutral in the long run and affects only nominal variables
C. Fiscal policy is the only effective tool
D. Real and nominal variables are interdependent
Answer: Option B
Solution (By JKSSB Mock Tests)
Classical dichotomy refers to the separation of real and nominal variables, with money being neutral in the long run and affecting only the price level, not real output or employment.
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