________- the proposition that changes in the money supply do not affect real variables.
New cards
2
incentives
Almost all taxes distort ________, causing people to alter their behavior.
New cards
3
velocity of money
The ________ is relatively stable over time.
New cards
4
Classical dichotomy
________- the theoretical separation of nominal and real variables.
New cards
5
P × Y
Because velocity is stable, when the central bank changes the quantity of money (M), it causes proportionate changes in the nominal value of output (________)
New cards
6
Shoeleather
________ costs- the resources wasted when inflation encourages people to reduce their money holdings.
New cards
7
Fisher effect
________- the one- for- one adjustment of the nominal interest rate to the inflation rate.
New cards
8
Inflation
________ makes investors less able to sort successful from unsuccessful firms.
New cards
9
economys output of goods
The ________ and services (Y) is primarily determined by factor supplies (labor, physical capital, human capital, and natural resources) and the available production technology.
New cards
10
equation M
Quantity equation- the** ________ × V= P × Y**, which relates the quantity of money, the velocity of money, and the dollar value of the economys output of goods and services.
New cards
11
Deflation
________ is rarely as steady and predictable.
New cards
12
Inflation tax
________- the revenue the government raises by creating money.
New cards
13
Inflation
________ does not in itself reduce peoples real purchasing power.
Studied by 0 people
