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What is the velocity of money why is it important to the

Assignment

1. What is the "velocity of money"? Why is it important to the macro-economy?

2. Why would some households with increases in "household wealth" continue to consume at their prior household level even given household wealth increases? How would this be related to the velocity of money?

3. Why is U.S. Government spending crucial to the creation of higher "new equilibrium levels"? Is this good for the macro-economy? Explain why or why not.

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