Other things the same,a decrease in velocity means that
A)the rate at which money changes hands falls,so the price level rises.
B)the rate at which money changes hands falls,so the price level falls.
C)the rate at which money changes hands rises,so the price level rises.
D)the rate at which money changes hands rises,so the price level falls.

Question

Quizplus · Accepted Answer

The velocity of money is the rate at which money changes hands in the economy. If the velocity of money decreases, it means that money is changing hands at a slower rate. This would lead to a decrease in the demand for goods and services, which would lead to a decrease in the price level. Therefore, choice B is the correct answer.

Other Things the Same,a Decrease in Velocity Means That