The Monetary System Flashcards
1
Q
what happens when price rises
A
purchasing power of a dollar decreases; quantity money demand rises; money supply rises (shifts to the right)
2
Q
what happens when price falls
A
purchasing power of a dollar increases; quantity money demand falls; money supply falls (shifts to the left)
3
Q
money demand
A
the amount money(M1) you need to have in your pockets to buy goods and services
4
Q
money supply
A
the amount of money(M1) in circulation
