Velocity of Money Calculator

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GDP mode uses aggregate national-accounts data. Fisher mode uses the quantity-theory variables: price index, transaction volume, and money supply.
Choose the scale that matches your GDP figure.
Total market value of all goods and services produced in the economy during the period, before adjusting for inflation. Leave blank to solve for GDP instead.
Choose the scale that matches your money supply figure.
Total stock of money in the economy (M1 = cash + demand deposits; M2 adds savings and small time deposits). Leave blank to solve for M instead.
M2 is preferred for velocity analysis because it captures most liquid savings; M1 produces a higher velocity figure.
If you know the velocity you want, enter it here and leave GDP or money supply blank to reverse-solve for the missing value.
Velocity of MoneyModerate velocity
1.3per period

How many times each unit of currency changed hands during the period

Economic interpretationModerate-low - typical of post-recession recovery.
Annual monetary turnover27,360,000,000,000
1.3 per period
Idle / hoarding<1Slow circulation1-2Active economy2-3.5High - inflation risk3.5+

Money velocity is 1.30 - moderate circulation.

  • Each unit of currency changed hands approximately 1.30 times during the period.
  • Velocity in the 1-2 range is typical of modern developed economies with broad M2 money supply. The US M2 velocity has generally stayed in this band since the 1990s.
  • You used M2 (broad money). M2 velocity in the US has declined from around 1.9 in 2006 to below 1.4 in recent years, partly due to quantitative easing expanding the money supply faster than GDP.
  • A money supply of $21.00 trillion at this velocity drives $27.36 trillion in total annual economic activity.

Next stepLow velocity often accompanies low inflation or deflation risk. Central banks may respond by expanding the money supply or cutting interest rates to stimulate spending.

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