Calculate velocity of money in economic analysis.
Calculate the velocity of money to measure how quickly money circulates through an economy and analyze monetary efficiency.
Velocity of Money
Money Turnover
circulation rate
Economic Efficiency
based on velocity
Velocity of money measures how quickly money circulates through an economy during a given period. It indicates how efficiently money is being used for economic transactions.
| Velocity Range | Economic Condition | Implications | Typical Examples |
|---|---|---|---|
| 0-2 | Low Activity | Economic stagnation, high savings, low confidence | Recession, deflationary periods |
| 2-5 | Moderate Activity | Stable economy, normal spending patterns | Developed economies in normal times |
| 5-10 | High Activity | Economic growth, increased spending, confidence | Economic expansion, bull markets |
| 10+ | Very High Activity | Potential overheating, inflation risk | Hyperinflation, speculative bubbles |
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