Velocity of Money

Velocity of Money is the rate at which money circulates, changes hands, or turns over in an economy in a given period. It is usually measured as a ratio of GNP to a country’s total supply of money. It is greatly increases when the economy is up and it is a holiday season, especially from Thanksgiving through New Years Day. Velocity of Money is the frequency at which the average unit of currency is used to purchase newly domestically-produced goods and services within a given time period. It can be thought of as the rate of turnover in the money supply.