If, on average, the velocity of money is low
A) interest rates fall.
B) people hold onto money for a long period of time.
C) people hold onto money for a short period of time.
D) interest rates rise.

Question

Quizplus · Accepted Answer

When the velocity of money is low, it means that people are holding onto money for a long period of time and there is less circulation of money in the economy. This results in lower economic activity and slower growth. Therefore, people tend to hold onto money for a longer period of time when the velocity is low.

If, on Average, the Velocity of Money Is Low