The velocity of money is

Question

a. the same thing as the long-term growth rate of the money supply.
b. the money supply divided by nominal GDP.
c. the average number of times per year a dollar is spent.
d. the rate at which the Fed puts money into the economy.

Answer 1

The correct answer is:

c. the average number of times per year a dollar is spent.

The velocity of money refers to how frequently money is used to purchase goods and services within a given time period, typically calculated as the ratio of nominal GDP to the money supply.