The velocity of money is:
A) how quickly money can be printed.
B) how quickly individuals spend their incomes.
C) the average number of times a dollar is used in a transaction per year.
D) how many times individuals are paid per year.
E) None of these answers is correct.

Question

Quizplus · Accepted Answer

The velocity of money is defined as the number of times a unit of currency is spent per unit of time. It measures the rate at which money circulates through the economy and is calculated by dividing nominal GDP by the money supply. Option A is incorrect because velocity of money has nothing to do with printing money, but rather how fast it circulates. Option B is incorrect because while individual spending habits may affect the velocity of money, it is not solely determined by them. Option D is incorrect because the frequency of paychecks has no direct relationship to the velocity of money.

The Velocity of Money Is