Lecture notes
inflation
- Module
- Macroeconomics
- Institution
- The University Of Manchester (UOM)
Detailed chapter explained in easiest way with examples.Fisher effect is an imp topic.
[Show more]
1 review
By: pooja12 • 8 year ago
Content preview
INFLATIONThe Quantity Theory of Money
• A simple theory linking the inflation rate to the growth rate of the money supply.
• Begins with a concept called “velocity” (of circulation of money).
Velocity
• basic concept: the rate at which money circulates
• definition: the number of times the average euro or pound note changes hands in a given
time period
• example:
– €500 billion in transactions in a year
– money supply = €100 billion
– The average euro is used in five transactions
– So, velocity = 5 times per year
• This suggests the following definition:
where
V = velocity
T = value of all transactions
M = money supply
• Use nominal GDP as a proxy for total transactions.
Then,
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller abhay. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for £5.39. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
79373 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy revision notes and other study material for 14 years now