One criticism of monetary policy based on a predetermined steady growth rate in money supply is that
A) wages and prices are sufficiently flexible to allow the economy to restore the natural level of Real GDP on its own.
B) the total lag in monetary policy may be too long to allow for effective monetary policy.
C) changes in velocity,if not accounted for,can then be a source of price instability.
D) a and b
E) all of the above

Question

Quizplus · Accepted Answer

Changes in velocity can affect the relationship between money supply and economic variables like price levels, leading to instability if not considered.

One Criticism of Monetary Policy Based on a Predetermined Steady