All posts for the month February, 2021

The role of expectations

In the previous post, we examined the Quantity Theory of Money. We have seen that increases in money growth rate lead to high inflation leading to higher speed and lower real money demand. This indicates that when it comes to a rise in the money supply growth rate, in the long run, the price increase will […]

The Quantity Theory of Money

In the previous post, we entered the fiat money system. Now we will examine the quantity theory of money. The fiat currency’s supply and demand are different from the commodity money model(silver or gold) we examined earlier. There are two reasons for this: In the fiat money system, the government has unlimited control over the […]