TAILIEUCHUNG - Lecture Business economics - Lecture 20: Money and Inflation - II

After completing this chapter, students will be able to: See why some countries print so much money that they experience hyperinflation, examine how the nominal interest rate responds to the inflation rate, consider the various costs that inflation imposes on society. | Review of the previous lecture Money the stock of assets used for transactions serves as a medium of exchange, store of value, and unit of account. Commodity money has intrinsic value, fiat money does not. Central bank controls money supply. Quantity theory of money assumption: velocity is stable conclusion: the money growth rate determines the inflation rate. Lecture 20 Money and Inflation- II Instructor: Abbas Course code: ECO 400 Lecture Outline Seigniorage Fischer effect Money demand and the nominal interest rate Inflation Seigniorage To spend more without raising taxes or selling bonds, the govt can print money. The “revenue” raised from printing money is called seigniorage (pronounced SEEN-your-ige) The inflation tax: Printing money to raise revenue causes inflation. Inflation is like a tax on people who hold money. Inflation and interest rates Nominal interest rate, i not adjusted for inflation Real interest rate, r adjusted for inflation: r = i The Fisher

• Kinh tế học
• Business economics
• Lecture Business economics
• Business applications of economics
• Open economy
• Competitive markets
• Money supply
• Economic Models
• Principles of economics
• Economics of agriculture
• Monopolistic competition
• Macroeconomic policy
• Supply curve
• Elasticity of demand
• Consumer choice
• Competitive firms
• Imperfect competition
• Gross domestic product
• Financial intermediaries
• Productivity growth
• Natural rate of unemployment
• Labor force