The velocity of money can best be described as
A) how quickly prices are increasing.
B) how quickly output is increasing.
C) the number of times each dollar in the money supply us used to buy goods and services included in GDP.
D) the growth rate of the money supply.

Question

Quizplus · Accepted Answer

The velocity of money refers to how many times a dollar is used to purchase goods and services included in GDP. It is calculated by dividing nominal GDP by the money supply. It is not related to the growth rate of the money supply, how quickly output is increasing, or how quickly prices are increasing.

The Velocity of Money Can Best Be Described as