When velocity is not constant, there can be problems with using money growth rates as an intermediate target.

Name: When velocity is not constant, there can be problems with using money growth rates as an intermediate target.
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Question

Quizplus · Accepted Answer

When velocity is not constant, changes in the money supply may not have a predictable effect on output and prices. Therefore, targeting the growth rate of money may not be an effective intermediate target for policymakers.

When Velocity Is Not Constant, There Can Be Problems with Using