第6章货币、价格水平和通货膨胀祥解.ppt

* * * * * Velocity of circulation. Emphasize that velocity is defined by the equation V = PY/M, and is not the average number of times a given piece of paper changes hands in a year. Nor is V the transactions velocity because most transactions are not payments for goods and services. (Transactions are twice PY because they also include payments for the services of factors of production, which equals PY, plus all the purely financial transactions such as buying and selling stocks, bonds, foreign currency, and real estates.) The quantity theory of money. Given that V is defined as PY/M, the equation of exchange, MV = PY is an identity. The quantity theory is not the equation of exchange but the propositions that (1) V is independent of M and (2) Y equals potential GDP, which is independent of M. Given these assumptions, the inflation rate equals the growth rate of the quantity of money. The quantity theory of hyperinflation. A possible exercise is to ask students whether we would expect the correlation between money growth and inflation to remain strong in a hyperinflation. Most will see that in a hyperinflation, velocity will increase. Emphasize that the level of velocity is greater in hyperinflation but if the inflation rate remains constant (and high) velocity also is constant (and high), so the quantity theory still holds. It does not hold in the move from low inflation to high inflation. The inflation rate overshoots the growth rate of the quantity of money. * * * * * Students usually have bank accounts, but often they have never fully thought through what banks do, how they do it, or what the differences are between banks and other deposit-taking institutions, so what tends to strike instructors as rather dry descriptive material can be interesting to students. It is worth being explicit about the fact, which students tend to be very aware of, that in practice chartered banks earn income not only by the spread between their deposit and lending rates, but also b