Question 1
Empirical evidence suggests that from 1960 until 2007, the velocity of money had, on average, been
◦ constant.
◦ decreasing.
◦ rising.
◦ fluctuating around zero.
Question 2
Which of the following is
true?
◦ Measuring money supply using M2 reduces fluctuations in velocity.
◦ Measuring money supply using M1 reduces fluctuations in velocity.
◦ Measuring money supply using M2 increases fluctuations in velocity.
◦ Velocity does not depend on which money supply measurement we use.