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4 Between 1960 and 1980, there was a positive empirical relation between the U.S. money growth rate and the inflation rate (two years later). However,
4 Between 1960 and 1980, there was a positive empirical relation between the U.S. money growth rate and the inflation rate (two years later). However, between 2000 and 2020, this relation disappeared. Which of these potential explanations seems most plausible? 1 point In the post-2000 high inflation environment, the relation between money growth and inflation might break down. Innovations in money and payments might mean that monetary aggregates (e.g., M2) no longer accurately measure the money supply. Changes in the basket of goods and services (food, cell phones, gasoline, etc.) purchased by households means that the consumer price index no longer accurately measures inflation. All of the above
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