As we approached the end of the millennium, many economic crackpots advised citizens to hold large quantities of cash in anticipation of Y₂K disasters.What effect would this have had on velocity if many people had been foolish enough to follow this advice?

Question

Quizplus · Accepted Answer

If many people had followed this advice and held large quantities of cash, the velocity of money would have decreased. Velocity is the number of times money changes hands in a given period, so if people are holding onto cash instead of spending it, the velocity will decrease.

As We Approached the End of the Millennium, Many Economic