货币、利率和汇率.pptVIP

Chapter 14 Money,Interest Rates,and Exchange rates Introduction Factors that affect a country’s money supply or demand are among the most powerful determinants of its currency’s exchange rate against foreign currencies. This chapter combines the foreign-exchange market with the money market to determine the exchange rate in the short run. It analyzes the long-term effects of monetary changes on output prices and expected future exchange rates. 1. Money and interest rate (1)Money and its function Concept: Assets widely used and accepted as a means of payment. Money is very liquid, but pays little or no return Functions: Money as a Medium of Exchange Money as a Unit of Account Money as a Store of Value (2)Money Supply and Demand Money Supply (Ms) Ms = Currency + Checkable Deposits Money Demand (Md) expected return , Risk and liquidity influence individual money demand Aggregate money demand is determined by three main factors: Interest rate Price level Real national income Aggregate Real Money Demand and the Interest Rate The condition for equilibrium in the money market is: Ms = Md → Ms/P = L(R,Y) 2.The Money Supply and the Exchange Rate From short run and long run analysis Short run analysis The price level and the real output are given. Long run analysis The price level is perfectly flexible and always adjusted immediately to preserve full employment. Long-run equilibrium (2)If MsUS↑, how about E$/€? Conclusion: A country’s money supply causes its currency to depreciate in the foreign exchange market. On the contrary, a reduction in a country’s money supply causes its currency to appreciate in the foreign exchange market. 3.Money, the Price Level, and the Exchange Rate in the Long Run (1) Money and Money Prices The money market equilibrium can be rearranged to give the long-run equilibrium price level: P = Ms/L(R,Y) An increase in a country’s money supply causes