The velocity of M1 money has moved erratically in the past several years because
A)of low and stable rates of inflation
B)of regulatory changes allowing banks to pay interest on checkable deposits
C)interest rates have been stable
D)monetary policy has been highly erratic
E)a large number of banks and savings and loan associations have gone bankrupt

Question

Quizplus · Accepted Answer

Regulatory changes allowing banks to pay interest on checkable deposits can affect the velocity of M1 money by influencing how quickly money circulates in the economy, as these changes can alter the demand for holding money.

The Velocity of M1 Money Has Moved Erratically in the Past