The velocity of money increases with a _____,other things constant.
A)fall in the inflation rate
B)rise in the inflation rate
C)rise in the employment rate
D)fall in the exchange rate
E)rise in the real interest rate

Question

Quizplus · Accepted Answer

The velocity of money refers to the number of times a dollar is spent in a given period of time. When inflation rises, people tend to spend their money faster, as they are motivated to buy goods and services before prices continue to rise even further. Therefore, a rise in inflation leads to an increase in the velocity of money.

The Velocity of Money Increases with a _____,Other Things Constant