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Strategies & Market Trends : 50% Gains Investing

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To: Sober who wrote (72005)2/2/2009 1:29:17 PM
From: OblomovRead Replies (1) of 118717
 
Sober, velocity of money is the average number of times each dollar in the economy changes hands in a year. It is a number calculated from money supply and GDP. Velocity can't be measured directly.

nominal GDP (i.e. not inflation adj.) = (money supply) * (velocity)

We could debate what the definition of money supply is, but households are spending less than a year ago. Thus despite the higher money supply, nominal GDP is down.
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