V= Velocity of Money
P= Price Level (GDP Deflator)'
Y= Real GDP
M= Quantity of Money
Deflation- the price falling is associated with this
Inflation- the percentage change in consumer price index
Zimbabwe reached 24,000 percent in inflation.
A decrease in price index causes shift right deflation.
Federal Reserve buys bonds money supply shifts right, price level rises
When money is vertical so the money supply curve is vertical
Price level rises , value falls so people want more money
Money demand is determined by price level but not interest rate
Inflation tax is determined by revenue government creates from printing money.
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