In countries with low inflation:
A)M2 growth is a very strong forecaster of inflation
B)There tends to be a greater reliance on checks than electronic payments
C)M2 growth is a poor forecaster of inflation
D)Money stocks are a larger percentage of GDP

Question

Quizplus · Accepted Answer

In countries with low inflation, M2 growth tends to be a poor forecaster of inflation. This is because there is less demand for money and velocity of circulation is slow, meaning that changes in the money supply have a smaller impact on prices. Therefore, relying solely on M2 growth to predict inflation in these countries may not provide accurate results.

In Countries with Low Inflation