What Is Velocity of Money

question 172

Multiple Choice

What is velocity of money?

• A) It is the number of times households convert bonds to money to facilitate economic transactions.
• B) It is the rate at which money supply is spent to obtain the goods and services that make up GDP during a particular time period.
• C) It is the rate at which money supply can grow while keeping the price level stable.
• D) It is the number of times the money supply is spent to obtain the goods and services that make up GDP during a particular time period.

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Definitions:

Absorption Costing

An accounting method that includes all direct costs and fixed and variable overhead costs in the cost of a product.

Net Income

The company's net income following the deduction of all expenditures and taxes from its total revenue.

Variable Selling Costs

Costs that vary directly with the volume of units sold, such as commissions and shipping expenses.

Variable Production Costs

Expenditures that change in direct correlation with production volumes, like direct labor and raw materials used.