princ ch3030货币增长通货膨胀原则经济学供应量如何影响名义.pdfVIP

In this chapter, look for the answers to these questions: ▪ How does the money supply affect inflation and nominal interest rates? ▪ Does the money supply affect real variables like real GDP or the real interest rate? ▪ How is inflation like a tax? ▪ What are the costs of inflation? How serious are they? CHAPTER 30 MONEY GROWTH AND INFLATION Introduction ▪ This chapter introduces the ty theory of money to ex in one of the Ten Pr iples of Economics from Chapter 1: Pric se when the t prints too mu oney. ▪ Most economists believe the ty theory is a good ex nation of the long run behavior of inflation. CHAPTER 30 MONEY GROWTH AND INFLATION The Value of Money ▪ P = the price level (e.g., the CPI or GDP deflator) P is the price of a basket of goods, measured in money. ▪ 1/P is the value of $1, measured in goods. ▪ Example: basket contains one candy bar. • If P = $2, value of $1 is 1/2 candy bar • If P = $3, value of $1 is 1/3 candy bar ▪ Inflation drives up prices, and drives down the value of money. CHAPTER 30 MONEY GROWTH AND INFLATION The ty Theory of Money th ▪ Developed by 18 century philosopher David Hume, and the classical economists. ▪ Advocated more recently by Nobel Prize Laureate Milton Friedman. ▪ Asserts that the ty of money determines the value of money. ▪ We study this theory usin o approaches: 1. a supply-demand diagram 2. an equation CHAPTER 30 MONEY GROWTH AND INFLATION Money Supply (MS) ▪ In real world, determined by Federal Reserve, the banking system