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Two Important Assumptions Contained in David Hume's Price Specie-Flow

Question 12

Multiple Choice

Two important assumptions contained in David Hume's price specie-flow
Adjustment mechanism are that


A) countries are at full employment and the demands for traded goods are
"inelastic."
B) countries are at full employment and the price level of a country moves in
Inverse proportion to movements in the country's money supply.
C) a country with a balance-of-payments deficit will experience a gold outflow And countries are at a level of employment that is below full employment.
D) the demands for traded goods are "elastic" and countries are at full
Employment.

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