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Lecture+11 - Economics 102 Lecture 11 Money and Inflation...

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1 Economics 102 Lecture 11 : Money and Inflation LECTURE 11 MONEY AND INFLATION 1 Money and Inflation Zimbabwe In May, 2006, a single two-ply sheet of toilet paper cost Z$417 and a roll cost Z$145,750 (Z$ = Zimbabwe dollars). The annual inflation rate was 1000 percent. Today, the Zimbabwe inflation rate is above 4,500 percent and the economy is devastated. What is the cause of this very high rate of inflation? LECTURE 11 MONEY AND INFLATION 2 In this lecture, look for the answers to these questions: How does the money supply affect inflation? Does the money supply affect real variables like real GDP or the real interest rate?
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