If there are 100 transactions in a year and the average value of each transaction is $10, then if there is $200 of money in the economy, transactions velocity is times per year.
A)0.2
B)2
C)5
D)10

Question

Quizplus · Accepted Answer

Transactions velocity is defined as the number of times a unit of currency (in this case, $1) changes hands in a given time period. It can be calculated using the equation:
Transactions velocity = GDP (or total transactions in this case) / Money Supply

Using the information given in the question, we can calculate transactions velocity as follows:
Transactions velocity = 100 / 200
Transactions velocity = 0.5

Therefore, the correct answer is C) 5, since transactions velocity is 5 times per year.

If There Are 100 Transactions in a Year and the Average