Economics Part B

Table of Contents

Velocity of circulation of money

The speed at which money moves around the economy. In other words, the average number of times each dollar goes from hand to hand during a given period..

If the amount of money in the economy is $100 million, and the total number of payments during a period is $500 million, then we can say that each dollar was “used” on average 5 times, and the velocity of circulation of money is 5.