SlideShare a Scribd company logo
1 of 13
[object Object],[object Object],[object Object],[object Object],[object Object],Here’s a thought… Money on the move has no fixed abode!!
Understanding the Velocity of Money  –  By Prof.  Simply  Simple ,[object Object],[object Object]
[object Object],[object Object],Also…
So just like the game of soccer, where just one ball gets kicked again and again, in the game of money the same unit of money keeps on rolling around.
[object Object],[object Object],[object Object],To give an example…
[object Object],[object Object],Now…
You might have noticed that among A, B and C, the Rs100 note changed hands three times, generating a total transaction of Rs300.  In this example, therefore, the velocity of money is three.
How Money Moves! Cloth merchant gets a haircut from the barber Barber buys bread from the baker Baker buys clothes from the cloth merchant Rs. 100 Rs. 100 Rs. 100
The life of money looks so simple when it is just moving from the baker to the barber.  But what about the actual economy, where countless number of people are using different units of money for small and big transactions? How do we actually calculate the velocity of money in a real economy?
[object Object],[object Object],[object Object]
But how does one calculate different measurements of money supply such as M0, M1, M2, M3 and so on ? Don’t worry, I will cover all of that & more  in my next lesson.
[object Object],[object Object],[object Object],To Sum Up
[object Object],[object Object],Do write to me at  [email_address]

More Related Content

What's hot (20)

Money Supply
Money SupplyMoney Supply
Money Supply
 
Money supply
Money supplyMoney supply
Money supply
 
Spot and Forward Exchange Rate
Spot and Forward Exchange RateSpot and Forward Exchange Rate
Spot and Forward Exchange Rate
 
The money supply and inflation ppt @ bec doms
The money supply and inflation ppt @ bec domsThe money supply and inflation ppt @ bec doms
The money supply and inflation ppt @ bec doms
 
IS-LM Analysis
IS-LM AnalysisIS-LM Analysis
IS-LM Analysis
 
Money
MoneyMoney
Money
 
Topic 11 - Monetary Theory
Topic 11 - Monetary TheoryTopic 11 - Monetary Theory
Topic 11 - Monetary Theory
 
Foreign exchange
Foreign exchangeForeign exchange
Foreign exchange
 
Chapter 15 monetary theory-and-policy
Chapter 15 monetary theory-and-policyChapter 15 monetary theory-and-policy
Chapter 15 monetary theory-and-policy
 
A Presentation on IS-LM Model
A Presentation on IS-LM ModelA Presentation on IS-LM Model
A Presentation on IS-LM Model
 
Money
MoneyMoney
Money
 
Exchange Rate Determination
Exchange Rate DeterminationExchange Rate Determination
Exchange Rate Determination
 
Chap5(the open economy)
Chap5(the open economy)Chap5(the open economy)
Chap5(the open economy)
 
Balance of payment theory
Balance of payment theoryBalance of payment theory
Balance of payment theory
 
Money Market: Demand for Money
Money Market: Demand for MoneyMoney Market: Demand for Money
Money Market: Demand for Money
 
Liquidity preference theory
Liquidity preference theory Liquidity preference theory
Liquidity preference theory
 
Determinant of Money Supply
Determinant of Money SupplyDeterminant of Money Supply
Determinant of Money Supply
 
THE THEORY OF MONEY
THE THEORY OF MONEYTHE THEORY OF MONEY
THE THEORY OF MONEY
 
MONEY SUPPLY AND MONETARY POLICY
MONEY SUPPLY AND MONETARY POLICYMONEY SUPPLY AND MONETARY POLICY
MONEY SUPPLY AND MONETARY POLICY
 
International Finance
International FinanceInternational Finance
International Finance
 

Viewers also liked (19)

Froyen04
Froyen04Froyen04
Froyen04
 
Introduction to computer
Introduction to computerIntroduction to computer
Introduction to computer
 
Four monetary terms part 1
Four monetary terms part 1Four monetary terms part 1
Four monetary terms part 1
 
Mss bonds
Mss bondsMss bonds
Mss bonds
 
Fiscal consolidation
Fiscal consolidationFiscal consolidation
Fiscal consolidation
 
Sovereign rating of a country
Sovereign rating of a countrySovereign rating of a country
Sovereign rating of a country
 
Fiscal revenue
Fiscal revenueFiscal revenue
Fiscal revenue
 
Carry trade
Carry tradeCarry trade
Carry trade
 
Revenue trade
Revenue tradeRevenue trade
Revenue trade
 
Sortino
SortinoSortino
Sortino
 
Oil bonds
Oil bondsOil bonds
Oil bonds
 
Money market
Money marketMoney market
Money market
 
Speculative attacks
Speculative attacksSpeculative attacks
Speculative attacks
 
Run on a bank
Run on a bankRun on a bank
Run on a bank
 
Understanding deflation
Understanding deflationUnderstanding deflation
Understanding deflation
 
Government debt repayment
Government debt repaymentGovernment debt repayment
Government debt repayment
 
Stagflation
StagflationStagflation
Stagflation
 
Capital account convertibility
Capital account convertibilityCapital account convertibility
Capital account convertibility
 
Sharpe
SharpeSharpe
Sharpe
 

Similar to Velocity of money

Basics of Money Supply
Basics of Money SupplyBasics of Money Supply
Basics of Money Supplygr1309
 
The Financial Sector and the Economy© Collection of the New-Yo.docx
The Financial Sector and the Economy© Collection of the New-Yo.docxThe Financial Sector and the Economy© Collection of the New-Yo.docx
The Financial Sector and the Economy© Collection of the New-Yo.docxcherry686017
 
The Intricate Workings of Money
The Intricate Workings of MoneyThe Intricate Workings of Money
The Intricate Workings of MoneyDebbie-Ann Hall
 
Model of a flexible exchange rate regime for Complementary currencies
Model of a flexible exchange rate regime for Complementary currenciesModel of a flexible exchange rate regime for Complementary currencies
Model of a flexible exchange rate regime for Complementary currenciesSehrGlobal
 
목요일 테스트.pdf
목요일 테스트.pdf목요일 테스트.pdf
목요일 테스트.pdfssuser716dad
 
AIOU Code 811 Monetary Theory and Policy Solved Notes Slides In English.pdf
AIOU Code 811 Monetary Theory and Policy Solved Notes Slides In English.pdfAIOU Code 811 Monetary Theory and Policy Solved Notes Slides In English.pdf
AIOU Code 811 Monetary Theory and Policy Solved Notes Slides In English.pdfZawarali786
 
AIOU Code 811 Monetary Theory and Policy Solved Notes Slides In English.pptx
AIOU Code 811 Monetary Theory and Policy Solved Notes Slides In English.pptxAIOU Code 811 Monetary Theory and Policy Solved Notes Slides In English.pptx
AIOU Code 811 Monetary Theory and Policy Solved Notes Slides In English.pptxZawarali786
 
peranan uang dalam perekonomian (1).pptx
peranan uang dalam perekonomian (1).pptxperanan uang dalam perekonomian (1).pptx
peranan uang dalam perekonomian (1).pptxyola145905
 
TIME VALUE OF MONEY.pdf
TIME VALUE OF MONEY.pdfTIME VALUE OF MONEY.pdf
TIME VALUE OF MONEY.pdftheyenca
 

Similar to Velocity of money (20)

Economics 10
Economics 10Economics 10
Economics 10
 
Lec7
Lec7Lec7
Lec7
 
Basics of Money Supply
Basics of Money SupplyBasics of Money Supply
Basics of Money Supply
 
The Financial Sector and the Economy© Collection of the New-Yo.docx
The Financial Sector and the Economy© Collection of the New-Yo.docxThe Financial Sector and the Economy© Collection of the New-Yo.docx
The Financial Sector and the Economy© Collection of the New-Yo.docx
 
The Intricate Workings of Money
The Intricate Workings of MoneyThe Intricate Workings of Money
The Intricate Workings of Money
 
Model of a flexible exchange rate regime for Complementary currencies
Model of a flexible exchange rate regime for Complementary currenciesModel of a flexible exchange rate regime for Complementary currencies
Model of a flexible exchange rate regime for Complementary currencies
 
목요일 테스트.pdf
목요일 테스트.pdf목요일 테스트.pdf
목요일 테스트.pdf
 
Lec13
Lec13Lec13
Lec13
 
MDIA p3 MONEY
MDIA p3 MONEY MDIA p3 MONEY
MDIA p3 MONEY
 
Money supply
Money supplyMoney supply
Money supply
 
Money
MoneyMoney
Money
 
Overview of Economics
Overview of EconomicsOverview of Economics
Overview of Economics
 
9TH ECONOMICS.pdf
9TH ECONOMICS.pdf9TH ECONOMICS.pdf
9TH ECONOMICS.pdf
 
AIOU Code 811 Monetary Theory and Policy Solved Notes Slides In English.pdf
AIOU Code 811 Monetary Theory and Policy Solved Notes Slides In English.pdfAIOU Code 811 Monetary Theory and Policy Solved Notes Slides In English.pdf
AIOU Code 811 Monetary Theory and Policy Solved Notes Slides In English.pdf
 
AIOU Code 811 Monetary Theory and Policy Solved Notes Slides In English.pptx
AIOU Code 811 Monetary Theory and Policy Solved Notes Slides In English.pptxAIOU Code 811 Monetary Theory and Policy Solved Notes Slides In English.pptx
AIOU Code 811 Monetary Theory and Policy Solved Notes Slides In English.pptx
 
peranan uang dalam perekonomian (1).pptx
peranan uang dalam perekonomian (1).pptxperanan uang dalam perekonomian (1).pptx
peranan uang dalam perekonomian (1).pptx
 
TIME VALUE OF MONEY.pdf
TIME VALUE OF MONEY.pdfTIME VALUE OF MONEY.pdf
TIME VALUE OF MONEY.pdf
 
Lec19
Lec19Lec19
Lec19
 
Currency Derivatives
Currency DerivativesCurrency Derivatives
Currency Derivatives
 
Follow The Money
Follow The MoneyFollow The Money
Follow The Money
 

More from Tata Mutual Fund

More from Tata Mutual Fund (11)

Budget Highlights - A Fiscally Prudent Budget
Budget Highlights - A Fiscally Prudent BudgetBudget Highlights - A Fiscally Prudent Budget
Budget Highlights - A Fiscally Prudent Budget
 
CIO Newsletter
CIO NewsletterCIO Newsletter
CIO Newsletter
 
Tata Balanced Fund - Plan A
Tata Balanced Fund - Plan ATata Balanced Fund - Plan A
Tata Balanced Fund - Plan A
 
Tata is 34th in global top 500 brands
Tata is 34th in global top 500 brandsTata is 34th in global top 500 brands
Tata is 34th in global top 500 brands
 
Gold is an excellent hedge against inflation
Gold is an excellent hedge against inflationGold is an excellent hedge against inflation
Gold is an excellent hedge against inflation
 
Fiscal deficit
Fiscal deficitFiscal deficit
Fiscal deficit
 
Deflation
DeflationDeflation
Deflation
 
Cash reserve ratio
Cash reserve ratioCash reserve ratio
Cash reserve ratio
 
(Gst) goods and services tax
(Gst) goods and services tax(Gst) goods and services tax
(Gst) goods and services tax
 
Credit default swaps
Credit default swapsCredit default swaps
Credit default swaps
 
American depository receipts
American depository receiptsAmerican depository receipts
American depository receipts
 

Recently uploaded

Effective Strategies for Maximizing Your Profit When Selling Gold Jewelry
Effective Strategies for Maximizing Your Profit When Selling Gold JewelryEffective Strategies for Maximizing Your Profit When Selling Gold Jewelry
Effective Strategies for Maximizing Your Profit When Selling Gold JewelryWhittensFineJewelry1
 
20220816-EthicsGrade_Scorecard-JP_Morgan_Chase-Q2-63_57.pdf
20220816-EthicsGrade_Scorecard-JP_Morgan_Chase-Q2-63_57.pdf20220816-EthicsGrade_Scorecard-JP_Morgan_Chase-Q2-63_57.pdf
20220816-EthicsGrade_Scorecard-JP_Morgan_Chase-Q2-63_57.pdfChris Skinner
 
Onemonitar Android Spy App Features: Explore Advanced Monitoring Capabilities
Onemonitar Android Spy App Features: Explore Advanced Monitoring CapabilitiesOnemonitar Android Spy App Features: Explore Advanced Monitoring Capabilities
Onemonitar Android Spy App Features: Explore Advanced Monitoring CapabilitiesOne Monitar
 
GUIDELINES ON USEFUL FORMS IN FREIGHT FORWARDING (F) Danny Diep Toh MBA.pdf
GUIDELINES ON USEFUL FORMS IN FREIGHT FORWARDING (F) Danny Diep Toh MBA.pdfGUIDELINES ON USEFUL FORMS IN FREIGHT FORWARDING (F) Danny Diep Toh MBA.pdf
GUIDELINES ON USEFUL FORMS IN FREIGHT FORWARDING (F) Danny Diep Toh MBA.pdfDanny Diep To
 
Fordham -How effective decision-making is within the IT department - Analysis...
Fordham -How effective decision-making is within the IT department - Analysis...Fordham -How effective decision-making is within the IT department - Analysis...
Fordham -How effective decision-making is within the IT department - Analysis...Peter Ward
 
How To Simplify Your Scheduling with AI Calendarfly The Hassle-Free Online Bo...
How To Simplify Your Scheduling with AI Calendarfly The Hassle-Free Online Bo...How To Simplify Your Scheduling with AI Calendarfly The Hassle-Free Online Bo...
How To Simplify Your Scheduling with AI Calendarfly The Hassle-Free Online Bo...SOFTTECHHUB
 
Traction part 2 - EOS Model JAX Bridges.
Traction part 2 - EOS Model JAX Bridges.Traction part 2 - EOS Model JAX Bridges.
Traction part 2 - EOS Model JAX Bridges.Anamaria Contreras
 
trending-flavors-and-ingredients-in-salty-snacks-us-2024_Redacted-V2.pdf
trending-flavors-and-ingredients-in-salty-snacks-us-2024_Redacted-V2.pdftrending-flavors-and-ingredients-in-salty-snacks-us-2024_Redacted-V2.pdf
trending-flavors-and-ingredients-in-salty-snacks-us-2024_Redacted-V2.pdfMintel Group
 
Jewish Resources in the Family Resource Centre
Jewish Resources in the Family Resource CentreJewish Resources in the Family Resource Centre
Jewish Resources in the Family Resource CentreNZSG
 
1911 Gold Corporate Presentation Apr 2024.pdf
1911 Gold Corporate Presentation Apr 2024.pdf1911 Gold Corporate Presentation Apr 2024.pdf
1911 Gold Corporate Presentation Apr 2024.pdfShaun Heinrichs
 
digital marketing , introduction of digital marketing
digital marketing , introduction of digital marketingdigital marketing , introduction of digital marketing
digital marketing , introduction of digital marketingrajputmeenakshi733
 
Psychic Reading | Spiritual Guidance – Astro Ganesh Ji
Psychic Reading | Spiritual Guidance – Astro Ganesh JiPsychic Reading | Spiritual Guidance – Astro Ganesh Ji
Psychic Reading | Spiritual Guidance – Astro Ganesh Jiastral oracle
 
1911 Gold Corporate Presentation Apr 2024.pdf
1911 Gold Corporate Presentation Apr 2024.pdf1911 Gold Corporate Presentation Apr 2024.pdf
1911 Gold Corporate Presentation Apr 2024.pdfShaun Heinrichs
 
Unveiling the Soundscape Music for Psychedelic Experiences
Unveiling the Soundscape Music for Psychedelic ExperiencesUnveiling the Soundscape Music for Psychedelic Experiences
Unveiling the Soundscape Music for Psychedelic ExperiencesDoe Paoro
 
Environmental Impact Of Rotary Screw Compressors
Environmental Impact Of Rotary Screw CompressorsEnvironmental Impact Of Rotary Screw Compressors
Environmental Impact Of Rotary Screw Compressorselgieurope
 
Memorándum de Entendimiento (MoU) entre Codelco y SQM
Memorándum de Entendimiento (MoU) entre Codelco y SQMMemorándum de Entendimiento (MoU) entre Codelco y SQM
Memorándum de Entendimiento (MoU) entre Codelco y SQMVoces Mineras
 
WSMM Media and Entertainment Feb_March_Final.pdf
WSMM Media and Entertainment Feb_March_Final.pdfWSMM Media and Entertainment Feb_March_Final.pdf
WSMM Media and Entertainment Feb_March_Final.pdfJamesConcepcion7
 
Appkodes Tinder Clone Script with Customisable Solutions.pptx
Appkodes Tinder Clone Script with Customisable Solutions.pptxAppkodes Tinder Clone Script with Customisable Solutions.pptx
Appkodes Tinder Clone Script with Customisable Solutions.pptxappkodes
 
How Generative AI Is Transforming Your Business | Byond Growth Insights | Apr...
How Generative AI Is Transforming Your Business | Byond Growth Insights | Apr...How Generative AI Is Transforming Your Business | Byond Growth Insights | Apr...
How Generative AI Is Transforming Your Business | Byond Growth Insights | Apr...Hector Del Castillo, CPM, CPMM
 

Recently uploaded (20)

Effective Strategies for Maximizing Your Profit When Selling Gold Jewelry
Effective Strategies for Maximizing Your Profit When Selling Gold JewelryEffective Strategies for Maximizing Your Profit When Selling Gold Jewelry
Effective Strategies for Maximizing Your Profit When Selling Gold Jewelry
 
WAM Corporate Presentation April 12 2024.pdf
WAM Corporate Presentation April 12 2024.pdfWAM Corporate Presentation April 12 2024.pdf
WAM Corporate Presentation April 12 2024.pdf
 
20220816-EthicsGrade_Scorecard-JP_Morgan_Chase-Q2-63_57.pdf
20220816-EthicsGrade_Scorecard-JP_Morgan_Chase-Q2-63_57.pdf20220816-EthicsGrade_Scorecard-JP_Morgan_Chase-Q2-63_57.pdf
20220816-EthicsGrade_Scorecard-JP_Morgan_Chase-Q2-63_57.pdf
 
Onemonitar Android Spy App Features: Explore Advanced Monitoring Capabilities
Onemonitar Android Spy App Features: Explore Advanced Monitoring CapabilitiesOnemonitar Android Spy App Features: Explore Advanced Monitoring Capabilities
Onemonitar Android Spy App Features: Explore Advanced Monitoring Capabilities
 
GUIDELINES ON USEFUL FORMS IN FREIGHT FORWARDING (F) Danny Diep Toh MBA.pdf
GUIDELINES ON USEFUL FORMS IN FREIGHT FORWARDING (F) Danny Diep Toh MBA.pdfGUIDELINES ON USEFUL FORMS IN FREIGHT FORWARDING (F) Danny Diep Toh MBA.pdf
GUIDELINES ON USEFUL FORMS IN FREIGHT FORWARDING (F) Danny Diep Toh MBA.pdf
 
Fordham -How effective decision-making is within the IT department - Analysis...
Fordham -How effective decision-making is within the IT department - Analysis...Fordham -How effective decision-making is within the IT department - Analysis...
Fordham -How effective decision-making is within the IT department - Analysis...
 
How To Simplify Your Scheduling with AI Calendarfly The Hassle-Free Online Bo...
How To Simplify Your Scheduling with AI Calendarfly The Hassle-Free Online Bo...How To Simplify Your Scheduling with AI Calendarfly The Hassle-Free Online Bo...
How To Simplify Your Scheduling with AI Calendarfly The Hassle-Free Online Bo...
 
Traction part 2 - EOS Model JAX Bridges.
Traction part 2 - EOS Model JAX Bridges.Traction part 2 - EOS Model JAX Bridges.
Traction part 2 - EOS Model JAX Bridges.
 
trending-flavors-and-ingredients-in-salty-snacks-us-2024_Redacted-V2.pdf
trending-flavors-and-ingredients-in-salty-snacks-us-2024_Redacted-V2.pdftrending-flavors-and-ingredients-in-salty-snacks-us-2024_Redacted-V2.pdf
trending-flavors-and-ingredients-in-salty-snacks-us-2024_Redacted-V2.pdf
 
Jewish Resources in the Family Resource Centre
Jewish Resources in the Family Resource CentreJewish Resources in the Family Resource Centre
Jewish Resources in the Family Resource Centre
 
1911 Gold Corporate Presentation Apr 2024.pdf
1911 Gold Corporate Presentation Apr 2024.pdf1911 Gold Corporate Presentation Apr 2024.pdf
1911 Gold Corporate Presentation Apr 2024.pdf
 
digital marketing , introduction of digital marketing
digital marketing , introduction of digital marketingdigital marketing , introduction of digital marketing
digital marketing , introduction of digital marketing
 
Psychic Reading | Spiritual Guidance – Astro Ganesh Ji
Psychic Reading | Spiritual Guidance – Astro Ganesh JiPsychic Reading | Spiritual Guidance – Astro Ganesh Ji
Psychic Reading | Spiritual Guidance – Astro Ganesh Ji
 
1911 Gold Corporate Presentation Apr 2024.pdf
1911 Gold Corporate Presentation Apr 2024.pdf1911 Gold Corporate Presentation Apr 2024.pdf
1911 Gold Corporate Presentation Apr 2024.pdf
 
Unveiling the Soundscape Music for Psychedelic Experiences
Unveiling the Soundscape Music for Psychedelic ExperiencesUnveiling the Soundscape Music for Psychedelic Experiences
Unveiling the Soundscape Music for Psychedelic Experiences
 
Environmental Impact Of Rotary Screw Compressors
Environmental Impact Of Rotary Screw CompressorsEnvironmental Impact Of Rotary Screw Compressors
Environmental Impact Of Rotary Screw Compressors
 
Memorándum de Entendimiento (MoU) entre Codelco y SQM
Memorándum de Entendimiento (MoU) entre Codelco y SQMMemorándum de Entendimiento (MoU) entre Codelco y SQM
Memorándum de Entendimiento (MoU) entre Codelco y SQM
 
WSMM Media and Entertainment Feb_March_Final.pdf
WSMM Media and Entertainment Feb_March_Final.pdfWSMM Media and Entertainment Feb_March_Final.pdf
WSMM Media and Entertainment Feb_March_Final.pdf
 
Appkodes Tinder Clone Script with Customisable Solutions.pptx
Appkodes Tinder Clone Script with Customisable Solutions.pptxAppkodes Tinder Clone Script with Customisable Solutions.pptx
Appkodes Tinder Clone Script with Customisable Solutions.pptx
 
How Generative AI Is Transforming Your Business | Byond Growth Insights | Apr...
How Generative AI Is Transforming Your Business | Byond Growth Insights | Apr...How Generative AI Is Transforming Your Business | Byond Growth Insights | Apr...
How Generative AI Is Transforming Your Business | Byond Growth Insights | Apr...
 

Velocity of money

  • 1.
  • 2.
  • 3.
  • 4. So just like the game of soccer, where just one ball gets kicked again and again, in the game of money the same unit of money keeps on rolling around.
  • 5.
  • 6.
  • 7. You might have noticed that among A, B and C, the Rs100 note changed hands three times, generating a total transaction of Rs300. In this example, therefore, the velocity of money is three.
  • 8. How Money Moves! Cloth merchant gets a haircut from the barber Barber buys bread from the baker Baker buys clothes from the cloth merchant Rs. 100 Rs. 100 Rs. 100
  • 9. The life of money looks so simple when it is just moving from the baker to the barber. But what about the actual economy, where countless number of people are using different units of money for small and big transactions? How do we actually calculate the velocity of money in a real economy?
  • 10.
  • 11. But how does one calculate different measurements of money supply such as M0, M1, M2, M3 and so on ? Don’t worry, I will cover all of that & more in my next lesson.
  • 12.
  • 13.