ECON: MACRO4
4th Edition
ISBN: 9781305436862
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 13, Problem 1.6PA
To determine
the reason for which the new discoveries of gold were regularly followed by periods of inflation, when the value of money was based on its gold content.
Concept Introduction:
Money has a major influence on the lives of most people. The more money a person makes, the more goods and services he can consume, resulting into a higher standard of living.
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Develop your concept that what will be the effect of inflation on money if it is not invested. Also define inflation, Deflation and hyperinflation.
In theory, inflation not only ______ the value of consumers' money over time, but it also increases the ____ of producers over time.
a.Decreases, wages
b.Increases, interest rates
c.Decreases, unemployment
d.Increases, real GDP
Does the Quantity Theory of Money adequately explain the cause of inflation?
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- • What is money, and why does anyone want it? Also, Explain the concept of the opportunity cost of holding moneyarrow_forwardThe major contributions and implications of the quantity theory of moneyarrow_forwardExplain the following lines taken from the selection, Imagination and Reality by J. Winterson: .” Money culture recognizes no currency but its own. Whatever is not money, whatever is not making money, is useless to it. The entire efforts of our government as directed through our society are efforts towards making more and more money. This favors the survival of the dullest. This favors those who prefer to live in a notional reality where goods are worth more than time and where things are more important than ideas.”arrow_forward
- If the quantity of money grows at 7 percent a year, the velocity of circulation is constant, and real GDP grows at 6 percent a year, what is the inflation rate? The inflation rate is ____ percent a year Thank youarrow_forwardThroughout history, all sorts of interesting things have been used as money, including fresh fish and cattle. Fresh fish is not an effective form of money. What essential characteristic of money does fresh fish lack that most makes it ineffective?arrow_forwardWhat is the difference in goals or endpoints between the circulation of commodities and the circulation of money as capital?arrow_forward
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