曼昆经济学原理Chapter30.ppt

Money Growth and Inflation
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Inflation
Inflation
Increase in the overall level of prices
Hyperinflation
Extraordinarily high rate of inflation
Deflation
Decrease in the overall level of prices
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The Classical Theory of Inflation
“Classical” theory of money
Quantity theory of money
Nowadays, this theory is used to explain the long-run determinants of the price level and the inflation rate
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Level of Prices; Value of Money
Inflation - rise in the price level
One dollar - buys a smaller quantity of goods and services
Lower the value of money
If the price level is measured by P, then the value of money can be denoted by (1/P)
P: amount of dollars needed to buy a fixed basket of goods and services
(1/P): amount of goods and services that can be bought with $1
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© 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
The Classical Theory of Inflation
Money demand
Reflects how much wealth people want to hold in liquid form (., money)
Depends on
Availability of ATM & credit card
Intere