Velocity (of Money)

Velocity (of Money)

A term used to describe the rate at which money is exchanged from one transaction to another.

Notes:

Velocity is important for measuring the rate at which money in circulation is used for purchasing goods and services. This helps investors gauge how robust the economy is. It is usually measured as a ratio of GNP to a country's total supply of money.

See also: Economy, GNP, Money Supply