Classical dichotomy (古典二分法)

Classical dichotomy (古典二分法 gǔ diǎn èr fēn fǎ) refers to a view of classical economics that real variables such as output, unemployment, and real interest rates are only determined by real factors and are independent of nominal variables, while nominal variables are simply determined by monetary factors. More precisely, the real and nominal variables can be analyzed separately. Also see: neutrality of money.

Part 1: Breakdown of Words

• “Classical” (古典 gǔ diǎn) as in classical music (古典音乐 gǔ diǎn yīn yuè).
  • “古” (gǔ) as in “ancient times” (古代 gǔ dài), “antique” (古董 gǔ dǒng), or “weird” (古怪 gǔ guài).
  • “典” (diǎn) as in “typical” (典型 diǎn xíng), “dictionary” (字典 zì diǎn), or “ceremony” (典故 diǎn gù).
• “Dichotomy” (二分法 èr fēn fǎ) refers to a method (法 fǎ) of division (分 fēn) into two (二 èr) mutually exclusive or contradictory categories.
  • “二” (èr) as in “second” (第二 dì èr), or “second class” (二等 èr děng).
  • “等” (děng) as in “wait” (等待 děng dài), or “equal” (等于 děng yú).
  • “分” (fēn) as in “score” (分数 fēn shù), “weight” (分量 fèn liàng), or “partition” (分割 fēn gē).