Indirect Measurement
In practice, attempts to measure the velocity of money are usually indirect:
where
- is the velocity of money for all transactions.
- is the nominal value of aggregate transactions.
- is the total amount of money in circulation on average in the economy (see “Money supply” for details).
(Given the classical dichotomy, may be factored into a product of a price level and a 'real' aggregate value of transactions .)
Values of and permit calculation of .
As applied to an economy, expenditures on final output are of interest; the relation may be written:
where
- is the velocity for transactions counting towards national or domestic product.
- is nominal national or domestic product.
(Analogously with, given the classical dichotomy, may be factored into a product .)
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Velocity of M1 Money Stock in the US 1959–2012
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Velocity of M2 Money Stock in the US 1959–2012
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Velocity of MZM Money Stock in the US 1959–2012
Read more about this topic: Velocity Of Money
Famous quotes containing the words indirect and/or measurement:
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