Which statement best defines the velocity of money?
A) It is the rate at which the central bank puts money into the economy.
B) It is the long-term growth rate of the money supply.
C) It is the money supply divided by nominal GDP.
D) It is the average number of times per year a dollar is spent.

Question

Quizplus · Accepted Answer

The velocity of money represents the frequency with which a dollar is spent in the economy over a given period of time. It is calculated as the ratio of nominal GDP to the money supply.

Which Statement Best Defines the Velocity of Money