Which of the following will cause velocity to increase?
A)An increase in the activity of the "underground" economy
B)A reduction in credit card interest rates
C)An increase in the unreliability of automatic teller machines
D)A surcharge on all credit card purchases
E)A decrease in crime rates

Question

Quizplus · Accepted Answer

A reduction in credit card interest rates will encourage people to spend more, resulting in an increase in the velocity of money. This is because people will have more money available to spend, which will increase the frequency of transactions and the speed at which money changes hands.

Which of the Following Will Cause Velocity to Increase