If on average, a dollar is spent 4 times each year to purchase real output, the velocity of money is:

Question

Quizplus · Accepted Answer

Velocity of money is the number of times money changes hands in the economy in a given period. Here, if a dollar is spent 4 times each year on real output, the velocity of money would be 4, as the same dollar is used 4 times in a year to purchase goods and services. Therefore, the correct option is B.

If on Average, a Dollar Is Spent 4 Times Each