Because there may be a time lag between a change in the money supply and its effects on nominal GDP, it is ________ to test whether the velocity of money is constant over time.
A) easy
B) difficult
C) impossible
D) pointless

Question

Quizplus · Accepted Answer

The time lag between a change in the money supply and the effects on nominal GDP makes it difficult to test whether the velocity of money is constant over time. This is because it is hard to isolate the impact of changes in money velocity from other economic factors that may be affecting GDP at the same time.

Because There May Be a Time Lag Between a Change