Not necessarily. For example, if I owe you two dollars, I can pay you one dollar, you can hire me and pay me a dollar (perhaps the same one), and then I can pay

Not necessarily. For example, if I owe you two dollars, I can pay you one dollar, you can hire me and pay me a dollar (perhaps the same one), and then I can pay you the dollar again. So a single dollar can pay for two dollars of debt. The number of times a dollar is spent is called its velocity, and it's on the order of 5, meaning on average each dollar is spent 5 times in a year.