The velocity of money measures:
A) the quantity of money in an economy
B) the rate of circulation of the money supply
C) the level of inflation caused by the money supply
D) none of the above

Question

Quizplus · Accepted Answer

The velocity of money measures how quickly money is changing hands in an economy, or the rate of circulation of the money supply. It is calculated as nominal GDP divided by the money supply. The velocity of money is an important factor in determining economic activity and inflation.

The Velocity of Money Measures