What factors beside transaction processing speed affect the velocity of money?
Is there a practical limit on the velocity of money?
what economic impact will result from nearing or reaching this limit?
Are there economic benefits to retarding the velocity of money under certain circumstances?
How should businesses consider the velocity of money in their strategies and decisions?
The velocity of circulation of money(Vm) is the number of times a unit of money changes hands during exchanges in a year.
The work done by one rupee which is circulated five times in a year is equal to that done by the five rupees which exchanges hands only once each.
Q1.What factors beside transaction processing speed affect the velocity of money?
Following things impact the Velocity of money (Vm), though not directly but indirectly,
Monetary Policy of the central bank of the country.w.r.t the changes in the interest rates.
The sudden threat like war, natural calamities that effects greater demand for specific products. (Contingencies).
Improved methods of production,viz-more foreign exchanges, better quality products, more demand so more money floating into the economy.
Flow of Foreign investments like FDIs, FIIs, as it again causes more buying and selling of the stocks, bonds ...
Velocity of Money synopsis is given.