All other things unchanged, the velocity of money will
A) increase if the quantity of money demanded decreases.
B) increase if the quantity of money demanded increases.
C) decrease if the quantity of money demanded decreases.
D) fall to zero if the quantity of money demanded increases.

Question

Quizplus · Accepted Answer

The velocity of money is the rate at which money circulates in the economy. If the quantity of money demanded decreases, people hold onto money for a shorter period, leading to an increase in the velocity of money.

All Other Things Unchanged, the Velocity of Money Will