第四章货币与通货膨胀要点.pptVIP

* Note: Each variable has been scaled to equal 100 to make variables comparable. This graph replicates Figure 3 in the textbook. Its purpose is to demonstrate that velocity is fairly stable over time. This observation justifies the assumption of constant velocity in the quantity theory of money. Original sources: M2 is from Board of Governors, Federal Reserve Board GDP is from U.S. Department of Commerce, Bureau of Economic Analysis. I obtained all data from FRED database, Federal Reserve Bank of St. Louis, at: /fred2/ This exercise makes the quantity theory more concrete for students. If you’re pressed for time, you can delete part b or ask students to do it on their own. * The nominal interest rate is the 3-month Treasury Bill rate. The inflation rate is calculated as the percent change in the CPI from 12 months earlier. Mostly, these two variables move very closely together: increases in inflation correspond to similar increases in the nominal interest rate. When the two variables are not moving precisely together, the real interest rate is changing. This would occur if, for example, there were changes in the supply and/or demand for loanable funds. Starting in the early 1980s, the emergence of huge budget deficits caused the supply of loanable funds to fall, which increased the real interest rate. On this graph, the gap between the nominal interest rate and inflation rate clearly grows in the early 1980s. Original sources: CPI, not seasonally adjusted: Bureau of Labor Statistics, U.S. Department of Labor Treasury Bill rate: Board of Governors of the Federal Reserve System Where I obtained this data: FRED database, Federal Reserve Bank of St. Louis /fred2/ * This graph is not in the textbook, but it helps expose the inflation fallacy. Note: If you change the scale of the CPI axis, you can make it look like the CPI is rising faster or slower than the average worker’s nominal wage. However, you can normalize both se