If the velocity of circulation was equal to 4 in 2017, it means that
A) consumers held four dollars in wealth for each dollar they spent in 2017.
B) on average, each dollar of money in the economy purchased four dollars of goods and services in GDP in 2017.
C) for each additional dollar of money injected into the economy, the price level rose 4 percent in 2017.
D) real output of goods and services in GDP rose by four dollars for each additional dollar of money consumers saved.

Question

Quizplus · Accepted Answer

The velocity of circulation refers to how many times a unit of currency (e.g., a dollar) is used to purchase goods and services within a certain period. If the velocity is 4, it means that on average, each dollar was used to buy four dollars' worth of goods and services in the economy during that period.

If the Velocity of Circulation Was Equal to 4 in 2017