Question

The decade during which the growth rates of monetary aggregates diverged the most is

A) the 1960s.
B) the 1970s.
C) the 1980s.
D) the 1990s.

Answer 1

The decade during which the growth rates of monetary aggregates diverged the most is the 1980s.

Step-by-step explanation:

The decade during which the growth rates of monetary aggregates diverged the most is the 1980s.

During this time, the velocity of M1 began to fluctuate, making it less desirable to have the money supply grow at a predetermined and unchanging rate.

This caused many central banks to focus less on the rate of money supply growth and instead set monetary policy based on whether the economy was experiencing higher inflation or unemployment.