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Chapter 15: Q.28 (page 379)

Define the velocity of the money supply.

Short Answer

Expert verified

The velocity of money means an assessment of the rate at which cash is traded in an economy.

Step by step solution

01

Concept 

Money supply can be defined as the total availability of money in the economy at a point or the total amount of money held by people in the economy at any point.

02

Explanation

Market analysts utilize the expression velocity" to depict how rapidly cash travels through the economy. It is the moment that money transfers beginning with one component then onto the subsequent. It additionally alludes to how much a unit of cash is utilized in a given timeframe. The rate at which a financial plan is traded in an economy is estimated by the velocity of capital.

GDP is divided by the cash supply in the velocity of capital equation. The velocity of the money process depicts the rate at which money is exchanged for interests and benefits in an economy by one department of finance.

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