Money Velocity Calculator

Money Velocity Calculation

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Question

If the amount of money in circulation is $200 million and the nominal GDP is $950 million, then the money velocity is ________.

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Explanations

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B

Velocity of money is defined as GDP divided by the stock of money. It is simply the average number of times a dollar is used to purchase a final product or service during a year. Thus, $950 million divided by $200 million equals 4.75.