Chapter 16: Price Levels and the Exchange Rate in the Long Run
Purchasing Power Parity (PPP)
Purchasing power parity: the idea that exchange rates are determined by the amount
of different currencies required to purchase a representative bundle of goods.
Chapter 15: Money, Interest Rate, and Exchange Rate
Money Defined: A Brief Review
How the Money Supply Is Determined
Money supply: Currency in circulation + Demand deposit.
A countrys money supply is determined by its central bank, i.e., we take money sup