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Username: Maria

Rating:
Guru Stars

Asked to: Chaoxiang Lee

Date Created: 28 Feb 2017
Category 46
Tag Financial
Question What is the 'Velocity Of Money'?
Advice from Guru
Hello Maria,

The velocity of money is the rate at which money is exchanged from one transaction to another and how much a unit of currency is used in a given period of time. Velocity of money is usually measured as a ratio of GNP to a country's total supply of money.

Velocity is important for measuring the rate at which money in circulation is used for purchasing goods and services, as this helps investors gauge how robust the economy is, and is a key input in the determination of an economy's inflation calculation.

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