Chapter 30 - Money Growth and Inflation

Capital gains

________ are the profits made by selling an asset for more than its purchase price.

Tax

________ is not a cost to society, it only transfers resources from households to the government.

Deflation

________: the decrease in the overall level prices.

monetary injection

A(n) ________ creates an excess supply of money.

central bank

When the ________ alters M and is proportionate to (P* Y), there is a change in P.

Hyperinflation

________ ends when the government institutes fiscal reforms that eliminate the need for inflation tax The Fisher Effect.

Inflation

________: the increase in the overall level of prices.

Quantity equation

________: MV= PY which relates the quantity of money, the velocity of money, and the dollar value of the economys output of goods and services.

level of prices

The average ________ in the economy affects the demand for money.

relative price

A(n) ________ is the price of one thing in terms of another.

inflation tax

The ________ is like a tax on everyone who holds money.

Monetary neutrality

________: the proposition that changes in the money supply do not affect real variables.

Y

________ (goods & service output) are determined by factor supplies.

quantity of M

The ________ is proportionate to (P* Y) (the nominal value of output)

Classical dichotomy

________: the theoretical separation of nominal variables and real variables.

Deflation

________ is often a symptom.

Hyperinflation

________: an extremely high rate of inflation.