Define the velocity of money. Explain the monetarist view with regard to the stability of velocity.
What will be an ideal response?
The velocity of money is the number of times per year that the average dollar is spent. It can be viewed as the rate at which money turns over in a year. The monetarists look at the value of V over the long run and conclude that it is stable. By stable the monetarist does not mean “constant.” Rather, the monetarist thinks that the factors changing velocity over time occur gradually and are predictable. Any year-to-year changes in velocity can be easily anticipated.
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a. Western coast of Africa b. The West Indies c. Eastern coast of India d. Western coast of North America e. Eastern coast of South America
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a. indifference curve b. expectation c. standard deviation d. correlation coefficient
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