In the 1990s
A)growth of M1 was more stable than growth of nominal GDP,and velocity soared through most of the period.
B)growth of nominal GDP was more stable than growth of M1,and velocity soared through most of the period.
C)growth of M1 was more stable than growth of nominal GDP,and velocity plummeted through most of the period.
D)growth of nominal GDP was more stable than growth of M1,and velocity plummeted through most of the period.

Question

Quizplus · Accepted Answer

In the 1990s, the growth of nominal GDP was more stable than the growth of M1, as M1 growth was affected by changes in banking regulations and financial innovation. The velocity of money soared through most of the period, indicating that each dollar of money supply was being used more frequently in transactions.