U15-Monetary Theory Barron's

equation of exchange

MV=PY (Y=real output)

inflation is proportional to the

growth rate of money

theory of monetary neutrality

change in money supply changes only nominal values

the theory of monetary neutrality is true only in the

long run

nominal interest is equal to

real + expected inflation

what shifts demand for loanable funds?

new technology to make production cheaper, government borrowing, and more real or anticipated business opportunities

what shifts supply for loanble funds?

when people have a larger tendency to save, income increases, or there is a lager tendency to save

what shifts demand for money?

when prices increase or changes in income

what shifts supply for money?

The Federal Reserve (bonds)

money is a _____ good, this means that...

normal good, this means that as people's income increase, so does the demand for money