Changes in Velocity | Marginal Revolution University
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Changes in Velocity | Marginal Revolution University
What happens when aggregate demand shifts because of a change in the velocity of money? You’ll recall from earlier videos that an increase or decrease in velocity means that money is changing hands at a faster or slower rate.Changes in velocity are temporary, but they can still cause business fluctuations. For instance, say that consumption ...
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The velocity of money, V, is defined as the ratio of real GNP to real money holdings, V=Y /(M / P) in this chapter's notation. Use equation (14-4) to derive an expression for velocity and explain how velocity varies with changes in R and in Y. (Hint: The effect of output changes on V depends on the elasticity of aggregate money demand with respect to real output, which economists believe to be less than unity.) What is the relationship between velocity and the exchange rate? | Numerade
The velocity of money, V, is defined as the ratio of real GNP to real money holdings, V=Y /(M / P) in this chapter's notation. Use equation (14-4) to derive an expression for velocity and explain how velocity varies with changes in R and in Y. (Hint: The effect of output changes on V depends on the elasticity of aggregate money demand with respect to real output, which economists believe to be less than unity.) What is the relationship between velocity and the exchange rate? | Numerade
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