Velocity of circulation of money is _____________.
Show answer & explanation
Correct answer: B
Explanation
The correct answer is option 2 i.e. the number of times a unit of money changes hands during the unit period.
The velocity of circulation of money measures how quickly money circulates in the economy within a given period. It reflects the frequency with which the average unit of currency is used for transactions involving goods and services. A higher velocity means money is being actively used, indicating a vibrant economy. It plays an essential role in monetary economics and is closely linked to the equation of exchange: MV = PT.