What is Velocity of Money in Retail? Explained

Velocity of money in economics refers to the rate at which money circulates within an economy. It measures the number of times a unit of currency changes hands or is spent on goods and services over a specific period. A higher velocity of money is often associated with a more active and dynamic economy, as it indicates that money is being used for transactions and economic activity. In contrast, a lower velocity may suggest economic stagnation or a lack of spending. Monitoring the velocity of money is essential for understanding the overall health and vitality of an economy.