David Hume's Price-Specie-Flow Mechanism

question 5

Multiple Choice

David Hume's price-specie-flow mechanism

• A) reinforced the Mercantilist notion that a country could maintain a permanent "favorable" balance of trade where exports exceeded imports.
• B) works more effectively if demands for traded goods are "price-elastic" rather than "price-inelastic."
• C) assumed that the countries involved have substantial unemployment.
• D) works equally effectively whether demands for traded goods are "price-elastic" or "price-inelastic."

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