Velocity of money,
Definition of Velocity of money:
Rate at which money circulates, changes hands, or turns over in an economy in a given period. Higher velocity means the same quantity of money is used for a greater number of transactions and is related to the demand for money. It is measured as the ratio of GNP to the given stock of money. Also called velocity of circulation.
The velocity of money is important for measuring the rate at which money in circulation is being used for purchasing goods and services. It is used to help economists and investors gauge the health and vitality of an economy. High money velocity is usually associated with a healthy, expanding economy. Low money velocity is usually associated with recessions and contractions.
The velocity of money is a measurement of the rate at which money is exchanged in an economy. It is the number of times that money moves from one entity to another. It also refers to how much a unit of currency is used in a given period of time. Simply put, it's the rate at which consumers and businesses in an economy collectively spend money. The velocity of money is usually measured as a ratio of gross domestic product (GDP) to a country's M1 or M2 money supply.
How to use Velocity of money in a sentence?
- The velocity of money in times of prosperity is much higher than the velocity of money in times of recession.
- The velocity of money formula shows the rate at which one unit of money supply currency is being transacted for goods and services in an economy.
- The velocity of money is typically higher in expanding economies and lower in contracting economies.
- The velocity of money was an interesting thing to keep track of, because one minute it was here and the next it was there.
- The velocity of money greatly increases when the economy is up and it is a holiday season, especially from Thanksgiving through New Years Day.
- Velocity of money is a measurement of the rate at which money is exchanged in an economy.
- The velocity of money equation divides GDP by money supply.
Meaning of Velocity of money & Velocity of money Definition