Question

Which of the following reduced the demand stimulus effects of the fed's low interest rate policy pursued during, and after, the financial crisis of 2008-2009? a. declining stock prices during 2010-2012. b. a reduction in the velocity of money. c. a sharp increase in the rate of inflation during 2009-2012. d. an increase in earnings derived from money market accounts, saving deposits, and similar saving instruments

Answer 1

A. A reduction in the velocity of money

The velocity of money is a measure of how fast money changes hands in the economy, measured by dividing the GDP by the money supply.