Is variability in velocity more of a problem in high or low inflation countries? Explain.

What will be an ideal response?

In countries where inflation and money growth are both very high, say over 100 percent, variations in the growth of velocity are annoyances the solution to the inflation problem is to get control of money growth. In low inflation environments, the success of the use of money growth as a monetary policy tool very much is predicated upon the stability of velocity. In these environments an unstable velocity of money can make monetary policy very difficult.