The velocity of money is the
A) relationship between the money supply and the price level.
B) number of times per year the average dollar is spent on ﬁnal goods and services.
C) relationship between asset and transactions demands for money.
D) price level divided by aggregate supply.

Question

Quizplus · Accepted Answer

The velocity of money is defined as the number of times per year that the average dollar is spent on final goods and services. It measures the rate at which money changes hands in the economy and is a key determinant of nominal GDP.

The Velocity of Money Is the