andInflation(宏观经济学-加州大学-詹姆斯·布拉德pjd.pptx
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1、CHAPTER 8Money,Prices,and Inflation1Copyright 2002 by The McGraw-Hill Companies,Inc.All rights reserved.QuestionsWhat do economists mean by“money”?Why is money useful?What do economists mean when they say that money is a unit of account?What determines the price level and the inflation rate?2Copyrig
2、ht 2002 by The McGraw-Hill Companies,Inc.All rights reserved.QuestionsWhy would a government ever generate“hyperinflation”?What determines the level of money demand?What determines the level of the money supply?Why is inflation seen as something to be avoided?3Copyright 2002 by The McGraw-Hill Compa
3、nies,Inc.All rights reserved.InflationIn the 1970s,the United States experienced an episode of relatively mild inflationprices rose between five and ten percent per yearcaused significant economic and political traumaavoiding a repeat of the inflation of the 1970s remains a major goal of economic po
4、licy4Copyright 2002 by The McGraw-Hill Companies,Inc.All rights reserved.Figure 8.1-Post-World War II Inflation in the United States,1951-20005Copyright 2002 by The McGraw-Hill Companies,Inc.All rights reserved.The Flexible-Price ModelThe Classical dichotomy implies that real variables(real GDP,real
5、 investment spending,or the real exchange rate)can be analyzed and calculated without considering nominal variables(price level)money is“neutral”This is a special feature of the full-employment flexible-price model6Copyright 2002 by The McGraw-Hill Companies,Inc.All rights reserved.Moneyis wealth th
6、at is held in a readily-spendable formis made up ofcoin and currencychecking account balancesother assets that can be turned into cash or demand deposits nearly instantaneously,without risk or cost7Copyright 2002 by The McGraw-Hill Companies,Inc.All rights reserved.The Usefulness of MoneyWithout mon
7、ey,market transactions would have to be performed through barterIn a barter economy,market exchange would require the coincidence of wantsyou would have to have some good or service that someone wants and he or she would have to have some good or service that you want8Copyright 2002 by The McGraw-Hi
8、ll Companies,Inc.All rights reserved.Figure 8.2-Coincidence of Wants9Copyright 2002 by The McGraw-Hill Companies,Inc.All rights reserved.The Usefulness of MoneyMoney also serves as a unit of accountmoney is used as a yardstick to measure value or quote pricesAnything that alters the real value of mo
9、ney in terms of its purchasing power will also alter the real terms of existing contracts that use the money as a unit of account10Copyright 2002 by The McGraw-Hill Companies,Inc.All rights reserved.The Demand for MoneyBusinesses and households have a demand for moneythey want to hold a certain amou
10、nt of wealth in the form of readily-spendable purchasing power to carry out transactionsa higher level of spending means a larger money demandThere is a cost of holding moneycash and checking deposits earn little or no interest11Copyright 2002 by The McGraw-Hill Companies,Inc.All rights reserved.Fig
11、ure 8.3-Reasons for and Opportunity Cost of Holding Money12Copyright 2002 by The McGraw-Hill Companies,Inc.All rights reserved.The Quantity Theory of Moneyassumes that the only important determinant of the demand for money is the flow of spendingcan be summarized usingthe Cambridge money-demand func
12、tionthe quantity equation13Copyright 2002 by The McGraw-Hill Companies,Inc.All rights reserved.The Quantity Theory of Money(P Y)represents the total nominal flow of spendingM is the quantity of moneyV is a measure of how fast money moves through the economyhow many times the average unit of money is
13、 used to buy a final good or service14Copyright 2002 by The McGraw-Hill Companies,Inc.All rights reserved.Figure 8.4-The Velocity of Money15Copyright 2002 by The McGraw-Hill Companies,Inc.All rights reserved.Determining the Price LevelIn the flexible-price model of the macroeconomyreal GDP(Y)is equa
14、l to potential GDP(Y*)the velocity of money is determined by the sophistication of the banking systemthe money supply is determined by the central bank16Copyright 2002 by The McGraw-Hill Companies,Inc.All rights reserved.Determining the Price LevelIf the price level is higher than the quantity equat
15、ion predictshouseholds and businesses will have less wealth in the form of money than they wishthey will cut back on purchasessellers will note demand is weak and lower prices17Copyright 2002 by The McGraw-Hill Companies,Inc.All rights reserved.Determining the Price LevelIf the price level is lower
16、than the quantity equation predictshouseholds and businesses will have more wealth in the form of money than they wishthey will increase purchasessellers will note demand is strong and raise prices18Copyright 2002 by The McGraw-Hill Companies,Inc.All rights reserved.Determining the Price LevelExampl
17、e(third quarter of 1998)real GDP=$7,566 billionmoney stock=$1,072 billionvelocity=7.964In the third quarter of 1998,the price level was equal to 112.84%of its 1992 level19Copyright 2002 by The McGraw-Hill Companies,Inc.All rights reserved.The Money StockThe Federal Reserve determines the money stock
18、 in the U.S.the determination of the money stock is the basic task of monetary policyThe Federal Reserve can directly impact the monetary basethe sum of currency in circulation and deposits at the Federal Reserves twelve branches20Copyright 2002 by The McGraw-Hill Companies,Inc.All rights reserved.T
19、he Money StockTo reduce the monetary base,the Federal Reserve sells short-term government securitiesTo increase the monetary base,the Federal Reserve buys short-term government securitiesThese transactions are called open market operations21Copyright 2002 by The McGraw-Hill Companies,Inc.All rights
20、reserved.Figure 8.5-Open Market Operations22Copyright 2002 by The McGraw-Hill Companies,Inc.All rights reserved.The Money StockThe Federal Reserve directly controls the monetary baseThe other measures of the money stock are determined by the interaction of the monetary base with the banking sectorre
21、gulatory requirementsthe incentive of financial institutions to have enough funds on hand to satisfy depositors demands23Copyright 2002 by The McGraw-Hill Companies,Inc.All rights reserved.The Money StockBesides the monetary base(H),there are other definitions of the money stock such asM1(currency,c
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