Money Supply 100%-reserve banking Fractional-reserve banking

Definition Inflation The overall increase in prices Hyperinflation: extraordinary high inflation

How the sr and lr differ In the Lr, prices are flexible and can respond to changes in S or D. In the Sr many prices are stuck at some predetermined level In the sr, monetary policy does have a potent effect on output and employment

Questions from Last Lecture Demand for money↑ =)=l ,Y) ↑ while fixed →l(r,y: hold& to balance the pressure ofd↑; hold,↑ to balance

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The money market LM curve The theory of liquidity preference

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