If the public's demand for holding cash increases,the growth rate of money velocity will:
A) remain unchanged.
B) increase.
C) decrease.
D) become unpredictable.

Question

Quizplus · Accepted Answer

The velocity of money is the number of times a unit of money changes hands in a given period. If the demand for holding cash increases, people will hold on to their money for longer periods, and the velocity will decrease. The opposite is also true; if the demand for holding cash decreases, people will spend more, and the velocity will increase.

If the Public's Demand for Holding Cash Increases,the Growth Rate