What are some things that would cause the velocity of money within an economy to increase?


Answer: The velocity of money is a macro economics term referring to the speed with which money changes hands, which can be determined by dividing the annual aggregate economic output (also called gross domestic product) of a country by the applicable money supply. The velocity of money can be impacted by many things. Growing optimism and confidence among consumers and businesses can increase velocity, whereas a decline in velocity can occur when people and companies become gloomier or more uncertain of their financial futures. Enhancements in technology that make transactions more efficient can also increase velocity.