If the demand for money is unstable then ________.
A) velocity is unpredictable
B) quantity of money is not linked to aggregated spending
C) aggregate spending rises
D) A and B only

Question

Quizplus · Accepted Answer

If the demand for money is unstable, it means that people are not consistent in their desire to hold money, which leads to unpredictable changes in the velocity of money. Therefore, A is correct. This instability in demand for money also means that the quantity of money in circulation is not strongly linked to aggregated spending, as people's demand for money can vary widely. This is why B is also correct. However, it does not necessarily mean that aggregate spending will always rise, so C is not correct.

If the Demand for Money Is Unstable Then ________