The behavior of the M1 velocity of money in recent years can be explained by
A)stability of interest rates
B)a low and stable rate of inflation
C)monetary policy that has been successful in stabilizing the economy
D)financial innovation creating new substitutes for money M1
E)a large number of banks and savings and loan associations going bankrupt

Question

Quizplus · Accepted Answer

Financial innovation creating new substitutes for money M1 has led to a decrease in the velocity of M1 in recent years. Consumers and businesses are using alternative forms of payment such as credit cards, electronic transfers, and online payment systems instead of physical currency and checking accounts.

The Behavior of the M1 Velocity of Money in Recent