Quote:
Originally Posted by BlessedCheeseMaker
There is high velocity money in my household does the velocity of money go with the law of diminishing returns? The less money you have the quicker the velocity?
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Kind of—the formula is V x M = P x Y, where M is your money supply, P the price level, and Y GDP. So the lower the money supply the higher its velocity.
But it’s a macroeconomic formula so it might not apply to microeconomics.