(Answered) when people want to hold ____ money, the income velocity of money increases, and the money demand…

➤ Why does income velocity rise when people hold less money?
Velocity rises because the same volume of transactions uses smaller money balances. By definition V = PY/M, so if M falls relative to nominal output PY, each monetary unit circulates more frequently. Lower desired cash holdings reduce k and create an inverse V = 1/k relationship.