The velocity of circulation is
A) equal to the price level multiplied by real GDP.
B) equal to the quantity of money multiplied by nominal GDP.
C) the average number of times a dollar bill is used in a year to buy the goods and services in GDP.
D) average quantity of money that exists during a year.

Question

Quizplus · Accepted Answer

The velocity of circulation refers to how quickly money moves through the economy, specifically how often a unit of currency (e.g., a dollar) is used to purchase goods and services within a given time period. It does not directly equate to the price level, quantity of money, or the average quantity of money existing during the year, but rather describes the rate at which money changes hands.

The Velocity of Circulation Is