You and a friend are arguing over the issue of the nonneutrality of money.You believe that money is not neutral,and to prove your point you would cite all of the following EXCEPT
A)large gold discoveries that increased the money supply preceded an economic boom.
B)a change in monetary institutions preceded a boom or recession.
C)a change in the leadership of the Fed and its policy was followed by noticeable changes in the money supply and a recession or inflation.
D)the fact that every recession was preceded by a drop in the money supply.

Question

Quizplus · Accepted Answer

All of the other options - A, B, and C - provide evidence that changes in the money supply or monetary policy have significant impacts on the economy, and therefore support the nonneutrality of money. Option D, however, goes the other way by suggesting that changes in the money supply FOLLOW economic downturns, making it less relevant to the argument for nonneutrality.

You and a Friend Are Arguing Over the Issue of the Nonneutrality