ECON 002 Lecture Notes - Lecture 18: Gdp Deflator, Money Supply, Production Function

43 views2 pages
School
Department
Course
Professor

Document Summary

Econ-002: macro economics lecture 18 money in the long run. Quantity theory of money: money quantity and inflation rate are in a positive correlation. Value of = 1/ price (thus price increases, value of money falls) This is measured in goods, aka, the real purchasing power. Supply: in the long run, the fed controls money supply and sets it at a fixed amount. Demand goes up as the price goes up. When fed increase money supply, people have more money. It creates incentives for firms to raise pines, as demand of people changed because there is no loans. M * v = p * y. M = money supply controlled by fed. Growth rate: gm + gv = inflation + gy quantity of each variable (derived by log: with constant v: gv = 0; and change of money supply does not change. Gdp (does not change the production function: thus gm = inflation.

Get access

Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers
Class+
$8 USD/m
Billed $96 USD annually
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
30 Verified Answers

Related Documents

Related Questions