ECONOMICS
INFLATION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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highly unstable.
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impossible to measure.
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the rate at which money loses its value.hanges hands.
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the rate at which inflation rises.
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the rate at which money c
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Detailed explanation-1: -Velocity of money is a measurement of the rate at which money is exchanged in an economy. The velocity of money equation divides GDP by money supply. The velocity of money formula shows the rate at which one unit of money supply currency is being transacted for goods and services in an economy.
Detailed explanation-2: -The transactions velocity is the economy-wide dollar value of all transactions during a year, divided by the average money supply during the period: Transactions Velocity = Transactions Money . The transactions velocity is the number of times on average that a dollar is used for a transaction.
Detailed explanation-3: -Velocity of money can be defined as the speed at which money flows or is exchanged in an economy.
Detailed explanation-4: -The quantity theory of money assumes that the velocity of money is constant. a. If velocity is constant, its growth rate is zero and the growth rate in the money supply will equal the inflation rate (the growth rate of the GDP deflator) plus the growth rate in real GDP.
Detailed explanation-5: -Velocity of Circulation and Money Demand Whenever the interest rate on financial assets is low, the desire to hold money falls as people try to exchange it for other goods or financial assets. As a result, the velocity of circulation rises. Hence, when the money demand is low, the velocity will be high.