l4 - Econ 102 Fall 2006 Lecture 4 Money in a Classical...

Info icon This preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
1 Econ 102 Fall 2006 Lecture 4 Money in a Classical Model
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
2 Questions this lecture will address What is the quantity theory of money and how does it explain prices? How is the Quantity Theory combined with the classical to model to explain employment and prices
Image of page 2
3 Three Classical Monetary Economists David Hume 1711--1776 Alfred Marshall 1842--1924 Irving Fisher 1867--1947
Image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
4 A Modern Monetary Economist Milton Friedman is responsible for reviving classical monetary theory. “Inflation is always and everywhere a monetary phenomenon”
Image of page 4
5 Quantity Theory M kY p = p M Y p M Y = - Demand for money is proportional to GDP k is constant implies Inflation equals money growth minus real growth
Image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
6 Quantity Theory (version 2) Mv pY = 1 k v = v is called the velocity of circulation. It is equal to 1/ k This way of writing the quantity theory of money is due to Irving Fisher
Image of page 6
7 Three High Inflation Countries 0 1000 2000 3000 4000 60 65 70 75 80 85 90 95 00 Money Growth Inflation Argentina -100 0 100 200 300 400 60 65 70 75 80 85 90 95 00 Money growth Inflation
Image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern