Classical Economist David Hume Observed That as the Money Supply

question 178

Multiple Choice

Classical economist David Hume observed that as the money supply expanded after gold discoveries it took some time for prices to rise and in the meantime the economy enjoyed higher employment and production. This is inconsistent with monetary neutrality because monetary neutrality would mean that

• A)neither prices nor production should have risen.
• B)production should have risen, but prices should not have.
• C)the prices should have risen, but production should not have changed.
• D)the prices and production should both have fallen.

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Definitions:

Obtaining Materials

The process of sourcing and procuring the raw materials needed for production or manufacturing.

Outsourcing

The practice of hiring third-party vendors to perform services or produce goods that were previously done internally, often to reduce costs.

Globalization

The process of interaction and integration among people, companies, and governments worldwide, often resulting in an interconnected global economy.

Supply Chain

A system of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer.