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The velocity of money is a measurement of the average number of times money is transferred or exchanged from one person to another.
It is the speed at which money circulates or changes hands in an economy over a given period of time.
The velocity of money in circulation also refer to the rate at which money is spent on goods and services in the economy.
Simply put, it is the average number of times that each unit of money is spent on purchase of goods and services during a given period.
Every producer would love to produce on a large scale.
However, production on a large scale is not possible without the use of money.
Producers required money to buy necessary raw materials, hire employees and invest in new and sophisticated equipment that will facilitate large scale production.
Aside large-scale production, producers also required money to advertise, market and distribute finished goods as production is not complete until it gets to the final consumers.
Furthermore, through money, the producer can discover through the price mechanism what people want and how much they want.
Money enables the producer to decide as to what should be produced and in what quantities to produce and make the best use of the available resources.
Money deserves more commendations among the outstanding inventions in the entire history of mankind.
By overcoming the problems of the barter system, it has been able to save time and eradicate difficulties in the organization of productive activities and in the distribution of the output of industry to consumers.
The massive technological progress of the past two centuries, the specialization of industry, and the establishment of countless local and international markets have all been facilitated by using money.
All of these would have been greatly impeded if reasonable and adequate monetary facilities had not been available.
The use of money makes it easy and simple to bring together factors of production and in organizing markets through which goods can be distributed for consumption.
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