The Fed moved away from a monetary growth rule because _____ was/were unstable.
A) the economy
B) the money supply
C) the velocity of money
D) interest rates

Question

Quizplus · Accepted Answer

The velocity of money was found to be unstable, which led the Fed to move away from a monetary growth rule. This means that the relationship between the money supply and the economy was not consistent and could not be relied upon to guide the Fed's monetary policy. Interest rates and other economic indicators may also be unstable, but it is the instability of the velocity of money that specifically caused the Fed to shift its approach.

The Fed Moved Away from a Monetary Growth Rule Because