How is the velocity of money defined?
A) by the time it takes the average worker to get to the bank with his paycheque
B) by the time it takes banks to clear a cheque
C) by the average number of times per year each dollar is used to purchase final goods and services
D) by the average number of times per year each dollar is spent for goods, payrolls, etc.

Question

How is the velocity of money defined?  
A) by the time it takes the average worker to get to the bank with his paycheque 
B) by the time it takes banks to clear a cheque 
C) by the average number of times per year each dollar is used to purchase final goods and services 
D) by the average number of times per year each dollar is spent for goods, payrolls, etc.

Quizplus · Accepted Answer

Velocity of money is defined as the number of times a unit of currency, such as a dollar, is spent in a given time period. It is the frequency at which one unit of currency is used to purchase goods and services within a certain period of time. Therefore, option C is the correct definition of velocity of money. Options A and B are not relevant to the definition of velocity of money. Option D is partially correct but incomplete as it does not consider the purchase of services.

How Is the Velocity of Money Defined