Answer to Question #234064 in Economics for Joseph zimba

Question

What are the main determinants of velocity of circulation of money?

Answer 1

In the short term, the speed indicator is constant, in the long term, it is a variable value that can be adjusted. The speed of money circulation is influenced by:

banking infrastructure of the country;

technical equipment of institutions participating in monetary schemes;

economic activity.

The more perfect the satellite, computer communications, technical equipment of banking structures, the more intensively money turns around and the less money is required for the stable functioning of the economy.

The money supply required for payment transactions depends on the demand for money, the supply of banks.