The real balance of Pigou effect relates to the effect of a fall in the price level on
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JNU SSS 2016 Question 50: Classical macroeconomics
Answer and worked solution
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Classical macroeconomics has come up 35 times in 7 exams since 2008.
What this question tests
This question is on Classical dichotomy, money neutrality and the Pigou effect, part of Classical macroeconomics in Macroeconomics.
Why money affects only the price level in the classical model, and how falling prices could restore full employment.
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