During the 2008 financial crisis velocity decreased. This means that the rate at which money changed hands
A)decreased.Other things the same, a decrease in velocity decreases the price level.
B)decreased.Other things the same, a decrease in velocity increases the price level.
C)increased.Other things the same, an increase in velocity decreases the price level.
D)increased.Other things the same, an increase in velocity increases the price level.

Question

Quizplus · Accepted Answer

Velocity of money refers to the frequency at which one unit of currency is used to purchase domestically-produced goods and services within a given time period. A decrease in velocity implies that money is changing hands less frequently, which can lead to a decrease in the price level if other factors remain constant, as less money is circulating in the economy to purchase goods and services.

During the 2008 Financial Crisis Velocity Decreased