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Ch. 17-Money Growth & Inflation
N/A
11
Economics
Undergraduate 2
12/08/2015

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Term
Velocity of Money
Definition
The rate at which money changes hands.
Term
Quantity Equation
Definition
The equation M x V = P x Y, which relates the quantity of money, the velocity of money, & the dollar value of the economy's output of goods & services.
Term
Classical Dichotomy
Definition
The theoretical separation of nominal & real variables.
Term
Monetary Neutrality
Definition
The proposition that changes in the money supply do not affect real variables.
Term
Quantity Theory of Money
Definition
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.
Term
Real variables
Definition
Variables measured in physical units.
Term
Menu Costs
Definition
The costs of changing prices.
Term
Nominal Variables
Definition
Variables measured in monetary units.
Term
Fisher Effect
Definition
The one-for-one adjustment of the nominal interest rate to the inflation rate.
Term
Shoeleather Cost
Definition
The resources wasted when inflation encourages people to reduce their money holdings.
Term
Inflation Tax
Definition
The revenue the government raises by creating money.
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