Monetary targeting was abandoned in Australia because:
A) the demand for money became more stable.
B) the supply of money became more volatile.
C) the velocity of money became more volatile.
D) the velocity of money became more stable.

Question

Quizplus · Accepted Answer

The velocity of money became more volatile, making it difficult for the Reserve Bank of Australia to control inflation through monetary targeting. This volatility in the velocity of money means that the relationship between money supply and economic activity became less predictable, undermining the effectiveness of monetary targeting as a policy tool.

Monetary Targeting Was Abandoned in Australia Because