ECON 205 Lecture (3.3.2008)

ECON 205 Lecture (3.3.2008) - If money supply increases...

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ECON-205 Lecture 3-3-2008 2 nd Midterm: April 2, 2008… Chapters 6, 7, 8, 9, 11 Four kinds of inflation - Demand inflation - Cost-push inflation - Structural inflation - Hyperinflation o Caused by printing money Productivity = output/hours If demand is greater than supply, then inflation M1: coins, dollars, checks, and traveler’s checks M2: savings M3: certificate of deposit (CD’s) issued by the Federal Reserve Bank (FRB) Money supply (demand) = GDP (supply) ???? What? If wages increase 10%, price increases 1.5%.
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Unformatted text preview: If money supply increases 10%, price will to up (to?) 15-20% Nominal income and real income-Nominal income: measurement with the current price (given time)-Real income: purchasing power of the money you will spend to purchase goods and services Who is really suffering from inflation?-Fixed income group o Welfare, social security (38 million living on social security), retirees-The banking system...
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