OMoney plays no role in this area of the classical system OIt influences neither employment, the rate of interest REal things are determined by real forces aTotal goods and services produced and total employment are determined by the supply of capital, labor force, and existing technology OThe interest rate is determined by the thriftiness of the public and the productivity of capital
qMoney plays no rol s no role in this ar in this area of th a of the classical system. qIt influ t influences neither employment, the rate of interest , nor production. qReal things ar al things are determined by real forces. qTotal goods and s otal goods and services produ s produced and total d and total employment are determined by the supply of capital, apital, labor fo labor force, and existing t isting technology. qThe interest rate is determined by the thriftin thriftiness of the public and the productivity of capital. apital
9. 1. 3 The quantity theory of money 8. According to the classicists, money is a veil that must be pierced to examine the determinants of real economic activity money affects the price level, but nothing else. An increase in the supply of money leads to an increase in the prices of all goods and services, but everything else-most notable the level of real economic activity the rate of interest, and people's real income--remains unchanged
9.1.3 The quantity theory of money v. According to the classicists, money is a veil that must be pierced to examine the determinants of real economic activity. vMoney affects the price level, but nothing else. An increase in the supply of money leads to an increase in the prices of all goods and services, but everything else-most notable the level of real economic activity, the rate of interest, and people’s real income---remains unchanged
equation of exchange(交易方程式 MV=PY(1) It is not the quantity theory but simply an identity Represents the supply of money V is velocity or its rate of turnover P is the price level y is the level of real income
equation of exchange(交易方程式) MV=PY (1) It is not the quantity theory but simply an identity. M represents the supply of money V is velocity or its rate of turnover P is the price level Y is the level of real income
On the right-hand side of equation(1) &Y represents total output of goods and services and Isually referred to real GDP 8 p is an index of the current prices of all goods When y is multiplied by P, we get the nominal level of GDP, or gDP measured in current prices
On the right-hand side of equation(1) vY represents total output of goods and services and is usually referred to real GDP. vP is an index of the current prices of all goods. When Y is multiplied by P, we get the nominal level of GDP, or GDP measured in current prices
On the left-hand side of equation(1) ☆ M represents the stock of money(货币存量 When M is multiplied by its velocity, the product My also equals total spending
On the left-hand side of equation(1) vM represents the stock of money (货币存量). When M is multiplied by its velocity, the product MV also equals total spending