Where’s the money going during recessions?

Question

It vice versa where’s it coming from when the economy is booming?

When the economy is bad, it feels like there’s not enough money to go around, but when it’s good there’s plenty.

In: Economics

Answer 1

It doesn’t go anywhere, it just trades hands more slowly. That is called velocity of money, and during a recession it slows as people slow spending because they’re been laid off or fear it, businesses spend less.