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other things the same, an increase in velocity means that

other things the same, an increase in velocity means that
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Answer #1

Other things remains same, an increase in velocity means that money spent on goods and services per unit, would be more frequently. (GDP÷Money Supply). Average currency money spent to purchase single piece of commodity and services. Therefore higher the velocity will leads to higher inflation rate.

Demand for money and velocity of money is inversely related. Higher demand for money,lower will be velocity of money. And lower demand for money, Higher would be velocity of money.

Overall, Velocity of money indicates condition of economy. Higher money velocity indicates expansion of economy. While lower money velocity indicates contraction in economy.

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