05-Money&Present Value

05-Money&Present Value - Class Business Current...

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Class Business Current Events Upcoming Case Types of Money Evolution of Payments System 1. Precious metals like gold and silver 2. Paper currency (fiat money) 3. Checks 4. Electronic means of payment 5. Electronic money: Debit cards, Stored- value cards, Smart cards, E-cash Will we become a cashless society?
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Table 2.1: The Monetary Aggregates Measuring Money How useful is M2 in tracking inflation? – When the quantity of money grows quickly, it produces high inflation – What is the relation between M2 and inflation (see Figure 2.4) • Positive correlation up until 1980. • From 1990-2000 - no correlation. – Recently Growth in M2 stopped being a useful tool for forecasting inflation.
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Measuring Money Why does M2 no longer predict inflation? – Maybe the relationship only applies at high levels of inflation. – Maybe it only shows up over longer periods of time. – Maybe we need a new measure of money. We do know that at low levels of money growth, inflation is likely to stay low.
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This note was uploaded on 11/22/2011 for the course ECONOMIC ManEc352 taught by Professor Keithvorkink during the Winter '11 term at BYU.

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05-Money&Present Value - Class Business Current...

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