There is evidence that the rate at which money changed hands rose during the German hyperinflation.This means that
A)velocity rose.If monetary neutrality holds the rise in velocity increased the ratio M/P.
B)velocity rose.If monetary neutrality holds the rise in velocity decreased the ratio M/P.
C)velocity fell.If monetary neutrality holds the fall in velocity increased the ratio M/P.
D)velocity fell.If monetary neutrality holds the fall in velocity decreased the ratio M/P.

Question

Quizplus · Accepted Answer

During hyperinflation, the velocity of money increases as people spend money quickly before it loses value. If monetary neutrality holds, the increase in velocity would decrease the real money supply ratio (M/P), as prices (P) rise faster than the money supply (M).

There Is Evidence That the Rate at Which Money Changed