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The correct answer to the question is:
- Fisher effect
The Fisher effect refers to the idea that nominal variables (such as money values) are heavily influenced by changes in the quantity of money, while real variables (like output and employment) are largely determined by non-monetary factors such as technology, preferences, and resources.
The Fisher effect is named after economist Irving Fisher and it helps in understanding the relationship between monetary and real variables in an economy. This concept highlights that changes in the quantity of money primarily affect nominal variables, while real variables are driven by other economic factors.
I hope this explanation helps you understand the Fisher effect better! If you have any more questions or need further clarification, feel free to ask.
