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Econ Ch 30

STUDY
PLAY
demand for money
the relationship between the interest rate and how much money people want to hold
equation of exchange
quantity of money (M) multiplied by its velocity (V) equals nominal GDP, which is the product of the price level (P) and real GDP (Y); MV = PY
velocity of money
the average number of times per year each dollar is used to purchase final goods and services
quantity theory of money
if the velocity of money is stable, or at least predictable, changes in the money supply have predictable effects on nominal GDP