《西方经济学教学课件》1. Ch25-11e-Lecture Presentation.pptVIP

* * * * * * Classroom activity Check out Economics in Action: The Variable Money Multipliers * It is worth reminding students that “money” has a jargon sense in economics; students are often confused by the phrase “demand for money” and it is worth tackling it head-on by emphasizing this does not equate to “wanting to be rich,” but refers to how much of total wealth (assets) the public want to hold in the particular form “money.” Students often try to understand ideas in terms of their own lives; few will make a clear connection between interest rates and demand for money from their own introspection. There are two ways to overcome this: one is to ask them to think in terms of extreme situations (get what short-term interest rates are in a high-inflation country); the other is to get them to imagine themselves in the job of treasurer of a corporation with large liquid resources, and to think how their behavior with respect to those funds might differ according to the short-term interest rates available. * * * * * * * * * * * * * * * * * * * * 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 estate.) 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 exe