Question 1: The behavior of the M1 velocity of money in recent years can be explained by:
a. stability of interest rates
b. a low and stable rate of inflation
c. monetary policy that has been successful in stabilizing the economy
d. financial innovation creating new substitutes for money M1
e. a large number of banks and savings and loan associations going bankrupt
Question 2: If interest rates are relatively high and rising in the United States,
a. the dollar will appreciate relative to other currencies as foreign investors purchase fewer U.S. bonds
b. the dollar will depreciate relative to other currencies as foreign investors purchase more U.S. bonds
c. the dollar will appreciate relative to other currencies as foreign investors purchase more U.S. bonds
d. the dollar will depreciate relative to other currencies as foreign investors purchase fewer U.S. bonds
e. nothing will change because U.S. interest rates have no international effects