Chapter 17 - Money Growth and Inflation

________- the proposition that changes in the money supply do not affect real variables.

________- the theoretical separation of nominal and real variables.

________- the one- for- one adjustment of the nominal interest rate to the inflation rate.

________ makes investors less able to sort successful from unsuccessful firms.

________- the revenue the government raises by creating money.

________ is rarely as steady and predictable.

Because velocity is stable, when the central bank changes the quantity of money (M), it causes proportionate changes in the nominal value of output (________)

the equation M × V= P × Y, which relates the quantity of money, the velocity of money, and the dollar value of the economys output of goods and services.

________- the resources wasted when inflation encourages people to reduce their money holdings.

________ does not in itself reduce peoples real purchasing power.