The Close Relationship Between M2 and Nominal GDP in the 1960s

question 47

Multiple Choice

The close relationship between M2 and nominal GDP in the 1960s and 1970s vanished from the 1980s through 2007.Which of the following contributed to this breakdown?
I.deregulation of the banking industry
II.introduction of new financial products (not included in M2) which allowed people to transfer funds into their checking accounts as and when needed
III.monetary policy lags

• A)I and II only
• B)II only
• C)II and III only
• D)I, II, and III

---

Definitions:

Milgram's Experiment

A series of social psychology experiments conducted by Stanley Milgram, which measured the willingness of study participants to obey an authority figure who instructed them to perform acts conflicting with their personal conscience.

Obedience To Authority

The act of following orders from someone recognized as a figure of authority, despite personal morals or beliefs.

Foot-In-The-Door Effect

A psychological phenomenon where agreeing to a small request increases the likelihood of agreeing to a larger request later.

Group Decision

A decision-making process where a group of individuals comes together to make a choice, considering various perspectives and aiming for a consensus or majority rule.