Term
Quantity of Money Demanded |
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Definition
The amount of money that households and firms choose to hold |
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Definition
The relationship between the quantity of money demanded and the nominal interest rate, when all other influences on the amount of money that people wish to hold to remain the same |
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The relationship between the quantity of money supplied and the nominal interest rate |
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Definition
The proposition that wehn real GDP equals potential GDPm an increase in the quantity of money brings an equal percentage increase in the price level |
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The number of times in a year that the average dollar of money gets used to buy the final goods and services |
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An equation that states that the quantity of money multiplied by the velocity of circulation equals the price level multiplied by real GDP |
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Inflation at a rate that exceeds 50% per month |
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Explain what determines the demand for money and how the demand for money and the supply of money determine the nominal interest rate |
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Explain how in the long run, the quantity of money determines the price level and the money growth brings inflation |
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Identify the cost of inflation and the benefits of a stable value of money |
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