Stable Velocity as a Contributing Factor to Successfully Using Money

question 103

Multiple Choice

Stable velocity as a contributing factor to successfully using money growth as a stabilizing monetary policy tool, is more important in an environment where:

• A) inflation is extremely high (e.g., over 100 percent).
• B) inflation is low (e.g., less than 10 percent).
• C) inflation occurs, the problems caused by a variable velocity are just as severe at low levels of inflation as at high levels of inflation.
• D) there is deflation.

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