The increasing attractiveness of a variety of liquid financial assets has caused the
A) velocity of M1 to rise.
B) demand for M1 to rise.
C) velocity of M1 to decline.
D) supply of M1 to decline.

Question

Quizplus · Accepted Answer

The increasing attractiveness of various liquid financial assets encourages people to hold less cash and more of these assets, leading to more frequent exchanges of the money they do hold, thus increasing the velocity of M1.

The Increasing Attractiveness of a Variety of Liquid Financial Assets