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11 Cards in this Set
- Front
- Back
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Quantity Theory Of Money
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A theory asserting that the quantity of money available determines the price level and that the growth rate in the quantity of money available determines the inflation rate.
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Nominal Variables
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Variables measured in monetary units
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Real Variables
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Variables measured in real units
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Classical Dichotomy
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The theoretical separation of nominal and real variables.
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Monetary Neutrality
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The proposition that changes in the money supply do not affect real variables
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Velocity of money
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the rate at which money changes hands
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Quantity Equation
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M x V= P x Y
See page 669 |
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Inflation Tax
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The revenue the government raises by creating money
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Fisher Effect
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The one for one adjustment of the nominal interest rate to the inflation rate.
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Shoeleather Costs
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The resources wasted when inflation encourages people to reduce their money holdings
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Menu Costs
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The costs of changing prices
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