How Is the Velocity of Money Defined

question 34

Multiple Choice

How is the velocity of money defined?  

• A) by the time it takes the average worker to get to the bank with his paycheque 
• B) by the time it takes banks to clear a cheque 
• C) by the average number of times per year each dollar is used to purchase final goods and services 
• D) by the average number of times per year each dollar is spent for goods, payrolls, etc.

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Definitions:

Equilibrium

A condition or state in which economic forces are balanced, such as the point where supply equals demand.

Market Clear

A situation in which the market reaches a state where quantity supplied equals quantity demanded, leaving no surplus or shortage.

Surplus

An excess of income or assets over expenditure or liabilities in a given period, typically a fiscal year, leading to available resources beyond what is required.

Supply Schedule

A table that shows the quantity of a good or service that producers are willing to supply at various prices.