If the Income Elasticity of Demand for M2 Is Close

Multiple Choice

If the income elasticity of demand for M2 is close to +1, then

A) demand for M2 will more than double if the level of income doubles
B) M2 is not a good intermediate target for monetary policy
C) the income velocity of M2 will vary greatly with changes in income
D) the income velocity of M2 will not be affected by interest rate changes
E) changes in income should not significantly affect the income velocity of M2