Does velocity change in response to changes in the money supply according to monetarists?
What will be an ideal response?
No. People have a stable desire to hold money relative to other financial assets, real assets, or for buying goods and services. How much money the public wants to hold depends primarily on the level of nominal GDP. Monetarists reason that the money supply is the causal force in determining nominal GDP.
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How does interbank foreign exchange trading work? What is being traded in the interbank part of the foreign exchange markets? What functions does it serve?
What will be an ideal response?
Stocks appear to present risk, yet many people have substantial parts of their wealth invested in them. This behavior could be explained by:
A. investing in stocks over the long run is not as risky as short-term holdings of stocks B. people are not very risk-averse and do not require a risk premium for stocks. C. people are not efficient users of information. D. people are irrational in their investment behavior, only focusing on positive outcomes.