The money multiplier and velocity of money are two metrics that used to be highly informative measures for economists to monitor a country’s level of economic growth.
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The velocity of money or income velocity of money is the frequency at which the average unit of currency is used to purchase newly domestic produced goods and services. The money multiplier measures the maximum amount of commercial bank money that can be created by a given unit of central bank money. As the central bank prints money, the money multiplier measures how much broader money...
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