宏观经济学╱应用经济学研究生系列教材[英文]Chapter 4.pptVIP

Money * Chapter Four * CHAPTER 4 Money and Inflation ? A PowerPoint?Tutorial To Accompany MACROECONOMICS, 7th. Edition N. Gregory Mankiw Tutorial written by: Mannig J. Simidian B.A. in Economics with Distinction, Duke University M.P.A., Harvard University Kennedy School of Government M.B.A., Massachusetts Institute of Technology (MIT) Sloan School of Management Stock of assets Used for transactions A type of wealth As a medium of exchange, money is used to buy goods and services. The ease at which an asset can be converted into a medium of exchange and used to buy other things is sometimes called an asset’s liquidity. Money is the economy’s most liquid asset. Inflation is an increase in the average level of prices, and a price is the rate at which money is exchanged for a good or service. Here is a great illustration of the power of inflation: In 1970, the New York Times cost 15 cents, the median price of a single-family home was $23,400, and the average wage in manufacturing was $3.36 per hour. In 2008, the Times cost $1.50, the price of a home was $183,300, and the average wage was $19.85 per hour. It serves as a store of value, unit of account, and a medium of exchange. The ease with which money is converted into other things such as goods and services--is sometimes called money’s liquidity. Money is the yardstick with which we measure economic transactions. Without it, we would be forced to barter. However, barter requires the double coincidence of wants—the unlikely situation of two people, each having a good that the other wants at the right time and place to make an exchange. Fiat money is money by declaration. It has no intrinsic value. Commodity money is money that has intrinsic value. When people use gold as money, the economy is said to be on a gold standard. The government may get involved in the monetary system to help people reduce transaction costs. Using gold as a currency is costly because the purity and weight has to be verified. Also, c