page_title: Velocity of money
hierarchical_section_title: Velocity of money
caption_attribution_description: English: M3 velocity calculated as the nominal GDP divided by the non-seasonally adjusted M3 money supply. M3 is discontinued from publication by Fed. Data runs through the end of 2005.
context_page_description: The velocity of money is a measure of the number of times that the average unit of currency is used to purchase goods and services within a given time period. The concept relates the size of economic activity to a given money supply and the speed of money exchange is one of the variables that determine inflation. The measure of the velocity of money is usually the ratio of gross national product to a country's money supply.
  If the velocity of money is increasing, then transactions are occurring between individuals more frequently. The velocity of money changes over time and is influenced by a variety of factors.
context_section_description: The velocity of money (or the velocity of circulation of money) is a measure of the number of times that the average unit of currency is used to purchase goods and services within a given time period. The concept relates the size of economic activity to a given money supply and the speed of money exchange is one of the variables that determine inflation. The measure of the velocity of money is usually the ratio of gross national product (GNP) to a country's money supply.
  If the velocity of money is increasing, then transactions are occurring between individuals more frequently. The velocity of money changes over time and is influenced by a variety of factors.
caption: Similar chart showing the logged velocity (green) of a broader measure of money M3 that covers M2 plus large institutional deposits. The US no longer publishes official M3 measures, so the chart only runs through 2005.
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