Chapter 30 - Money Growth and Inflation

Vocabulary
Quantity Theory of Money Nominal Variables Real Variables Classical Dichotomy Monetary Neutrality Velocity of Money Quantity Equation Inflation Tax Fisher Effect Shoeleather Costs Menu Costs
 * Definition: A theory asserting that the quantity of money available determines the price level and that the growth rate in the quantity of money available determines the inflation rate.
 * What It Means:
 * Definition: Variables measured in monetary units.
 * What It Means:
 * Definition: Variables measured in physical units.
 * What It Means:
 * Definition: The theoretical separation of nominal and real variables.
 * What It Means:
 * Definition: The proposition that changes in the money supply do not affect real variables.
 * What It Means:
 * Definition: The rate at which money changes hands.
 * What It Means:
 * Definition: The equation M x V = P x Y relates the quantity of money, the velocity of money, and the dollar value of the economy's output of goods and services.
 * What It Means:
 * Definition: The revenue the government raises by creating money.
 * What It Means:
 * Definition: The one-for-one adjustment of the nominal interest rate to the inflation rate.
 * What It Means:
 * Definition: The resources wasted when inflation encourages people to reduce their money holdings.
 * What It Means:
 * Definition: The costs of changing prices.
 * What It Means: