The economics of money, banking, and financial markets

PART 6

 

Monetary Theory  461

CHAPTER 19

Quantity Theory, Inflation, and the Demand for Money 

462

Quantity Theory of Money .......................................................................................................462

Velocity of Money and Equation of Exchange ..................................................................... 462

From the Equation of Exchange to the Quantity Theory of Money ..................................... 464

Quantity Theory and the Price Level .................................................................................. 465

Quantity Theory and Inflation............................................................................................ 465

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Contents in Detail

APPLICATION

  Testing the Quantity Theory of Money ............................................466

Budget Deficits and Inflation ...................................................................................................468

Government Budget Constraint .......................................................................................... 468

Hyperinflation .................................................................................................................... 470

APPLICATION

 The Zimbabwean Hyperinflation ......................................................470

Keynesian Theories of Money Demand ...............................................................................471

Transactions Motive ............................................................................................................ 471

Precautionary Motive .......................................................................................................... 471

Speculative Motive ............................................................................................................. 471

Putting the Three Motives Together .................................................................................... 471

Portfolio Theories of Money Demand ..................................................................................472

Theory of Portfolio Choice and Keynesian Liquidity Preference .......................................... 473

Other Factors That Affect the Demand for Money ............................................................... 473

Summary ............................................................................................................................ 474

Empirical Evidence for the Demand for Money ................................................................474

Interest Rates and Money Demand ..................................................................................... 474

Stability of Money Demand ................................................................................................ 475

Summary 476  •  Key Terms 476  •  Questions 476  •  Applied Problems 478  •   

Data Analysis Problems  478   •   Web Exercises  479   •   Web References  479