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:

Net Book Value

The value of an asset as recorded on the balance sheet, calculated by subtracting accumulated depreciation or amortization from its original cost.

Trend Analysis

The process of comparing business data over time to identify any consistent results or trends.

Aging Asset Base

Refers to a company's fixed assets becoming older and potentially less efficient or valuable over time.

Expensing R&D

The process of charging research and development costs as expenses in the period they are incurred rather than capitalizing them.