The View of the Classical Economists Regarding the "Neutrality of Money

question 84

Multiple Choice

The view of the Classical economists regarding the "neutrality of money" was that

• A)the allocation of resources is independent of the distribution of income.
• B)the distribution of income is independent of the allocation of resources.
• C)the real part of the economy cannot affect the level of money prices.
• D)the quantity of money has no effect on any real variables in the economy.
• E)money is neutral in its effect on absolute prices in the economy.

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Definitions:

Discontinued Item

A component of a company's operations that has been disposed of or is held for sale, and its earnings are separated out on the income statement.

MACRS

Modified Accelerated Cost Recovery System, a method of depreciation for tax purposes in the United States that allows faster write-offs of assets.

Straight-Line

A method of calculating depreciation of an asset, which allocates an equal amount of depreciation to each year of the asset's useful life.

Sum-Of-Years' Digits

A depreciation method that accelerates the expense recognition, using a decreasing fraction of years remaining over the sum of the years' digits.