Answer to Question #236423 in Macroeconomics for KAT

Question

Define velocity also discuss the role of velocity in quantity theory of money ?

Answer 1

The velocity of money is a measurement of the rate at which money is exchanged in an economy. It is measured as a ratio of gross domestic product (GDP) to a country money supply.As velocity of money is directly related to the frequency of exchange.As interest rates rise, the velocity of money increases.