Which of these is most likely to lower the velocity of money?
A) a commercial innovation that facilitates exchange
B) a low inflation rate
C) a decline in the effectiveness of money as a store of wealth
D) a high inflation rate
E) a weekly pay for workers instead of a monthly pay

Question

Quizplus · Accepted Answer

A low inflation rate is most likely to lower the velocity of money because when inflation is low, people are less inclined to spend money quickly, expecting that its value will not erode rapidly over time. This contrasts with high inflation scenarios, where people tend to spend money more quickly to avoid loss of purchasing power, thereby increasing the velocity of money.

Which of These Is Most Likely to Lower the Velocity