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Canada (162,105)
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ECON 1BB3 (339)
Chapter 11

Chapter 11 - Money Growth and Inflation.docx

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Bridget O' Shaughnessy

Chapter 11Money Growth and InflationThe increase in the overall level of prices is called inflation The decrease in the overall level of prices is called deflation An extraordinarily high rate of inflation is called hyperinflationThe classical theory of inflation Often called classical because it was developed by some of the earliest thinkers about economic issuesThe level of prices and the value of money Inflation is an economywide phenomenon that concerns first and foremost the value of the economys medium of exchangePrice level as a measure of the value of moneya rise in the price level means a lower value of money because each dollar in your wallet now buys a smaller quantity of goods and servicesIf P is the price of goods and services measure in terms of money 1P is the value of money measured in terms of goods and servicesThus when the overall price level rises the value of money fallsMoney supply money demand and monetary equilibrium Supply and demand dete
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