All else equal, an increase in the velocity of money will cause
A) deflation.
B) disinflation.
C) hyperinflation.
D) higher inflation.

Question

Quizplus · Accepted Answer

An increase in the velocity of money means that money is being spent more quickly and circulating faster in the economy. This, in turn, puts upward pressure on prices as more money is being used to purchase goods and services. Therefore, a higher velocity of money is associated with higher inflation.

All Else Equal, an Increase in the Velocity of Money