Velocity can be defined as:
A)the turnover rate of money
B)the speed at which economic activity takes place.
C)the speed at which multiplier effect takes place.
D)the speed at which tax cuts are spent.

Question

Velocity can be defined as:
A)​the turnover rate of money
B)​the speed at which economic activity takes place.
C)​the speed at which multiplier effect takes place.
D)​the speed at which tax cuts are spent.

Quizplus · Accepted Answer

Velocity is the turnover rate of money, which measures how quickly money changes hands in the economy. It is calculated by dividing nominal GDP by the money supply. Higher velocity indicates that money is being spent more frequently, which can lead to higher inflation.

Velocity Can Be Defined As