The velocity of circulation is
A) constant.
B) the average number of times a dollar of money is used in a year to buy goods and services in GDP.
C) the rate of change of the GDP deflator.
D) the changes in the purchasing power of money over a given time period.

Question

Quizplus · Accepted Answer

The velocity of circulation is the average number of times a dollar of money is used in a year to buy goods and services in GDP. It is not constant but varies with changes in economic conditions and monetary policy. It is also not related to the GDP deflator or the changes in the purchasing power of money over time.

The Velocity of Circulation Is