The number of times a unit of money changes hands during the unit period is called the _______

The correct answer is velocity of circulation of money.

Key Points

• The velocity of money refers to how often one unit of currency is used for purchases in a given time period.
• It's calculated by dividing the nominal GDP by the total amount of money supply.
• High velocity indicates a healthy economy and low velocity can indicate a sluggish economy.
• Understanding the velocity of money assists central banks in formulating monetary policy.
• High velocity can sometimes be associated with inflation, though the relationship is complex.

Additional Information

• Base Money: Also known as high-powered money, it consists of physical currency (coins and paper money) and central bank reserves, representing the base upon which the larger commercial banking system can create additional money through loans.
• Remittances: These are funds transferred by migrant workers back to their home country, playing a crucial role in the economies of many developing countries.
• Zero Economic Profit: It occurs when a firm's total revenues are exactly equal to its total opportunity costs, including both explicit and implicit costs, meaning the firm is just covering all its costs but not making any surplus profits.