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Velocity of money

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An increase in the velocity of money appears inflationary, as it can make prices rise. Even though we may be experiencing deflation, it could be masked by an increase in the velocity of money.

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This solution describes the concept of velocity of money.

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A change in the supply of money may induce inflation or deflation, the price level, and also effect gross domestic product. Deflation is is a decrease in the general price level, or a rise in the purchasing power of money with respect to a large class of ...

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