If the Velocity of Money Is Increasing, but the Money

question 22

Multiple Choice

If the velocity of money is increasing, but the money supply is not, it is likely the economy is experiencing:

• A)a trade deficit.
• B)deflation.
• C)growth.
• D)inflation.

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Definitions:

Demand for Funds

The desire of businesses, governments, and individuals to borrow money to fund investment projects, operations, or consumption.

Interest Rate

The cost of borrowing money or the return on investment for lenders, typically expressed as a percentage.

Stock Price Index

An index that measures the performance of a basket of stocks, representing a specific sector, market, or economy.

Economic Indicators

Statistics and data points that are used to gauge the overall health and direction of an economy.