The velocity of circulation is
A) the relationship between income and spending.
B) the relationship between increases in income and investment.
C) the ratio of currency to demand deposits.
D) the average number of times per year a dollar is spent on goods and services in GDP.

Question

Quizplus · Accepted Answer

The velocity of circulation refers to how quickly money moves through the economy, specifically measuring how often a unit of currency (like a dollar) is used to purchase domestically-produced goods and services within a given year. This concept is crucial in understanding the flow of money and its impact on economic activity.

The Velocity of Circulation Is