The average number of times each dollar is spent on final goods and services in a given year is a concept known as the
A) equation of exchange.
B) velocity of money.
C) weight of liquidity.
D) liquidity of the economy.
E) liquidity of financial assets.

Question

Quizplus · Accepted Answer

The concept described in the question is known as the velocity of money, which measures the rate at which money changes hands in the economy. It is calculated by dividing nominal GDP by the money supply. The velocity of money is an important factor in determining the level of economic activity in an economy. A higher velocity of money is generally associated with higher economic growth and inflationary pressures.

The Average Number of Times Each Dollar Is Spent on Final