Economics Part B

Velocity of circulation of money

The speed at which money moves around the economy. In other words, the average number of times each dollar goes from hand to hand during a given period..

If the amount of money in the economy is $100 million, and the total number of payments during a period is $500 million, then we can say that each dollar was "used" on average 5 times, and the velocity of circulation of money is 5.

Velocity of circulation of money576Velocity of circulation of money