How have financial innovations such as direct deposit of paychecks, el

How have financial innovations such as direct deposit of paychecks, electronic payment of bills, and automated teller machines (ATMs) affected the velocity of money and the demand for real money balances?

What will be an ideal response?

ANSWER

Because of these innovations, each unit of money is more quickly and easily available for transactions. Each unit of money is transacted more frequently, so velocity is increased. A given volume of transactions can be accomplished with fewer units of money, so the demand for real balances is reduced.