If velocity is rising,an increase in one spending component can occur without requiring other spending components to decline.

Question

Quizplus · Accepted Answer

Velocity refers to the rate at which money circulates in the economy, so an increase in velocity means that money is changing hands more frequently. In this scenario, it is possible for one spending component to increase without necessarily requiring a decrease in other spending components, as the increased circulation of money could potentially support increased spending across multiple areas.

If Velocity Is Rising,an Increase in One Spending Component Can