What does the more money in circulation?

First of all, let's talk about what is the velocity of money:

The average number of turnovers per unit of currency over a certain period. For example, 1 yuan currency performs the function of 4 circulation means or means of payment on average in 1 month, which plays the role of 4 yuan currency. The faster the money circulates, the less money is needed in circulation, and vice versa.

Impact: It will cause inflation, cause **, which will affect the consumption level of residents, and people's living standards will decline relatively, which is easy to cause economic instability.

Extended Materials. 1. Currency circulation, in the process of commodity circulation, currency constantly changes hands between sellers and buyers, and this continuous currency changes hands to form a currency circulation g-w-g accompanied by commodity circulation w-g-w.

2. The amount of money in circulation in society is determined by the two links of currency issuance and circulation. Usually the issuance is controlled by the state, and circulation is mainly carried out through banks. It is a basic principle of the modern financial system that banks can create a large amount of currency in circulation when carrying out business such as home mortgage loans.

In an efficient financial system, the state only needs to issue a small amount of base money.

It is possible to increase and reduce a large amount of money in circulation through the credit expansion of banks.

3. The form of money circulation.

1) Money circulation consists of the circulation of commodities and the flow of capital.

the movement of money as a means of circulation and payment.

2) The forms of money circulation include cash and non-cash circulation.

Cash circulation is the movement of money that directly uses cash as the means of circulation and payment, and is mainly the circulation of money linked to the circulation of commodities in the retail market of means of consumption and the small payment of individual residents.

Non-cash circulation or deposit transfer settlement is mainly related to commodity circulation, enterprises and institutions in the market of means of production and wholesale market of means of consumption.

Large payments and the circulation of money linked to financial transactions.

3) Money acts as a means of circulation, which is divided into three levels according to its degree of flexibility:

m0 = cash.

m1 = 0 + deposits of enterprises and institutions + demand deposits of urban and rural residents.

m2 = 1 + fixed deposits of urban and rural residents.

Enterprise special ** deposits + discountable treasury bills.

The more money in circulation, it will lead to the depreciation of paper money, the reduction of prices, purchasing power, beyond the need for commodity exchange, and will also lead to inflation, affecting the living standards of residents, and at the same time affecting economic growth.

The more money in circulation, the more inflationary it may bring, and at this time the price will **. Money will become devalued. Then the market will also become volatile. The development of the economy will be affected.

If there is too much money in circulation, it will depreciate the currency, and the currency of each country must control the quantity, and if it is printed too much, it is not a good thing for the total currency.

Inflation occurs only under the conditions of paper money circulation, and not under the conditions of gold and silver currency circulation. Because gold and silver money has value in itself, its function as a means of storage can spontaneously regulate the amount of money in circulation so that it is compatible with the amount of money required for the circulation of commodities. Under the conditions of paper money circulation, because paper money itself has no value, it is only a symbol representing gold and silver currency, and cannot be used as a means of storage, so if the amount of paper money issued exceeds the amount required for commodity circulation, it will depreciate.

The faster the unit of money circulates and the greater the amount of money in circulation, the less money is needed to trade commodities. Suppose that the amount of money required for commodity trading is 100 yuan, and we assume that there are 10 yuan (equivalent to the amount of money needed in circulation), and in a certain period of time, A uses it to buy 10 yuan of goods from B, and B uses it to buy 10 yuan of goods from C after receiving the money,??It takes 10 times to circulate 100 yuan to meet the 100 yuan needed for commodity trading, but if the amount of money required in circulation is 50 yuan, 2 times of circulation can be satisfied.

From this example, it is clear that the faster the money is circulated, the less money is needed in circulation, i.e., the two are inversely proportional. In addition, the amount of money required for commodity trading = the amount of money required in circulation * the velocity of money. From this formula, it can also be seen that when the amount of money required for commodity trading is constant, the faster the money circulates, the less money is needed in circulation, that is, the two are inversely proportional.

Extended Materials. A monetary unit is the name of the currency prescribed by the state. The English definition is currency unit; monetary unit; pecuniary unit。

The main goal of the European Monetary Union is to create a single European currency called the euro. The euro officially replaced the European Union in 2002.

The national currencies of member countries. On 1 January 1999, the initial transition phase for the use of the euro began. The euro exists only in the form of banking currencies and is used for book financial transactions and foreign exchange transactions.

This transition period lasts for three years, after which the euro will be fully circulated in the form of banknotes and coins. The member states of the European Monetary Union are: Germany, France, Belgium.

Luxembourg, Austria.

Finland, Ireland.

Netherlands, Italy, Spain, and Portugal.

Current LCU is the current monetary unit, which refers to the nominal **, while Constant LCU is the monetary unit of the unchanged or base period, which refers to the actual **.

Summary. Hello, I am glad to answer for you, there are several factors that affect the circulation of money:

1. The amount of money needed in circulation.

2. Changes in the level of monetary income and expenditure structure of residents.

3. The impact of industrial structure and production specialization.

4. The number of economic units and the developed state of the financial market.

5. The impact of the financial and settlement system.

6. Psychology of personal income and consumption habits.

You look at this, there is a specific impact analysis. I hope my reply is helpful to you and I wish you a happy life, thank you! 

What are the factors that affect the circulation of money?

Hello, I am glad to answer for you, there are several factors that affect the circulation of money:

1. The amount of money needed in circulation.

2. Changes in the level of monetary income and expenditure structure of residents.

3. The impact of industrial structure and production specialization.

4. The number of economic units and the developed state of the financial market.

5. The impact of the financial and settlement system.

6. Psychology of personal income and consumption habits.

Take a look at this, there is an analysis of the influence of Chongchang's respectful body. I hope my reply is helpful to you, I wish you a happy life, and thank you for your sanguine! 

Thank you. You're welcome

Yes, the fast circulation of money means that there is a lot of commodity trading, and the factories that produce goods must produce a lot of goods. Trading is active, the volume is high, and the value generated is also high.

The relationship between the velocity of money and the amount of money is very similar to the relationship between the speed at which an athlete races and the time it takes. The velocity of money refers to the average number of turnovers per unit of currency over a certain period of time. For example, if a 1 yuan currency performs an average of 4 circulation or payment functions in a month, it plays the role of a 4 yuan currency.

Assuming that the total value of commodities in our whole society is 10 trillion yuan, if the velocity of money is 5, then the actual amount of money required in circulation is 2 trillion yuan; If the velocity of money is 2 5, then the actual amount of money required in circulation is 4 trillion yuan. That is, the faster the money circulates, the less money is needed in circulation, and vice versa.

This relationship between the velocity of money and the amount of money is known in monetary banking as the theory of the quantity of money transactions. The demand for money is determined by both the nominal ** of commodities and the volume of commodity transactions, and the supply is determined by the amount of money ** and the velocity of money.

Through the role of demand and supply, the amount of money required in a transaction depends on the combined effect of the nominal commodity, the volume of commodity transactions and the velocity of money. If the quantity of goods in the market is large and high, the demand for the quantity of money will naturally be high; If money changes hands quickly between consumers, there will naturally be a low demand for the amount of money they have.

Therefore, from a qualitative point of view, the impact of nominal ** and commodity trading volume on the quantity of money is positive; The effect of money velocity on it is negative, that is, the faster the money circulates, the less money is needed.

The velocity of money refers to the average number of turnovers per unit of currency over a certain period of time. Such as:

The 1 yuan currency performs the function of a means of circulation or payment on average 4 times in 1 month, and it plays the role of a 4 yuan currency. The faster the money circulates. The less money is needed in circulation, the more vice versa.

For a country's economy, if the velocity of currency circulation is relatively fast, the actual demand for currency is less, and the amount of currency can be better controlled, so as to avoid the danger of excessive issuance and inflation; If the velocity of money is too slow, the actual demand for money will become larger for a period of time, and the bank will have to increase the amount of money, so there will be the possibility of inflation in the future, which is a lot of pressure on the economy.

Inflation. According to monetary quantitarians, the cause of inflation is the excessive issuance of money. Although inflation has an important relationship with the oversupply of money, it would be incomplete to attribute all the causes of inflation to the excessive supply of paper money.

This interpretation (meaning that "inflation is the result of too much money chasing too few goods"). It is simply not applicable to explain the kind of inflationary ...... that is currently plaguing most of the world, including industrialized countriesObviously, as long as inflation is accompanied by excessive unemployment, it cannot be the result of an overexpansion of the money supply or any other reason that allows nominal demand to exceed the productive capacity of the country. ”