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 hoarded cash in anticipation of Y2K disasters, it would have decreased the velocity since the money would not be circulating in the economy. Velocity is the rate at which money changes hands in the economy, and hoarding cash would reduce the frequency of transactions, thus decreasing velocity.

As We Approached the End of the Millennium, Many Economic