If the average household earns and spends $40,000 per year and holds a money balance of $10,000,then what is the velocity of money for the average householder?

Name: If the average household earns and spends $40,000 per year and holds a money balance of $10,000,then what is the velocity of money for the average householder?
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Question

Quizplus · Accepted Answer

Velocity of money (V) = Total spending (P) / Money balance (M)
Total spending (P) = Income (I) = $40,000 per year
Money balance (M) = $10,000
V = P/M = $40,000/$10,000 = 4

If the Average Household Earns and Spends $40,000 Per Year