The behavior of the M1 velocity of money in recent years can be explained by:
A)stability of interest rates.
B)a low and stable rate of inflation.
C)monetary policy that has been successful in stabilizing the economy.
D)financial innovation creating new substitutes for M1 money.
E)a large number of banks and savings and loan associations going bankrupt.

Question

Quizplus · Accepted Answer

Financial innovation has created new substitutes for M1 money, such as digital payment methods like Venmo and Apple Pay. This has decreased the velocity of M1 money as people hold more of their assets in these new forms of money.

The Behavior of the M1 Velocity of Money in Recent