According to the monetarists,the rise in (M1)velocity in the mid-1990s can be attributed to
A)changes in the type of bank deposits that are available to the public.
B)new legal ceilings imposed on the deposit rates financial institutions are permitted to pay depositors.
C)the phasing out of legal ceilings on the deposit rates financial institutions are allowed to pay depositors.
D)Both a and b
E)Both a and c

Question

Quizplus · Accepted Answer

The rise in (M1) velocity in the mid-1990s can be attributed to both changes in the type of bank deposits that are available to the public (option a) and the phasing out of legal ceilings on the deposit rates financial institutions are allowed to pay depositors (option c). Both of these factors contributed to an increase in the demand for money, leading to a higher velocity of money. Therefore, option E (Both a and c) is the best choice.

According to the Monetarists,the Rise in (M1)velocity in the Mid-1990s