Chapter 9 Flashcards
1
Q
Loanable Funds Supply Curve
A
vertical
2
Q
Functions of Money
A
- Medium of Exchange
- Store of Value
- Unit of Account
3
Q
Monetary Policy Instruments
A
- Open Market Operations
- Reserve Requirements
- The “lending” rate
4
Q
Velocity
A
The rate at which money circulates.
The number of times the average pound changes hands in a given time period.
V=T/M
V=(P*Y)/M
5
Q
The Quantity Equation
A
MV=PY
6
Q
The Quantity Equation in % Change Form
A
Assuming V is constant!
% change in M = % change in P + % change in Y
