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Classical Economist David Hume Observed That as the Money Supply

Question 178

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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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