Exam 20: Quantity Theory, Inflation, and the Demand for Money

Irving Fisher's view that velocity is fairly constant in the short run transforms the equation of exchange into the ________.

The Keynesian theory of money demand emphasizes the importance of ________.

Evidence suggests that a liquidity trap is possible when ________.

Keynes argued that the transactions component of the demand for money was primarily determined by the level of people's ________, which he believed were proportional to ________.

In the equation of exchange, the concept that provides the link between M and PY is called ________.

The Tobin mean-variance analysis of money demand is an application of ________.

In Irving Fisher's quantity theory of money, velocity was determined by ________.

In the Baumol-Tobin analysis of the demand for money, either an increase in ________ or an increase in ________ increases money demand.

Starting in 1974, the conventional M1 money demand function began to severely ________ the demand for money. Stephen Goldfeld labeled this phenomenon "the case of the missing ________."

The speculative motive for holding money is closely tied to what function of money?

The Keynesian theory of money demand predicts that people will increase their money holdings if they believe that ________.

The equation of exchange is ________.

A plot of Canadian inflation against annual money growth rate between 1971 and 2011 shows ________.

If people expect nominal interest rates to be higher in the future, the expected return on bonds ________, and the demand for money ________.

Keynes argued that when interest rates were high relative to some normal value, people would expect bond prices to ________ , so the quantity of money demanded would ________.

Because the quantity theory of money tells us how much money is held for a given amount of aggregate income, it is also a theory of ________.

Keynes argued that when interest rates were low relative to some normal value, people would expect bond prices to ________ so the quantity of money demanded would ________.

If the demand for money is unstable then ________.

Empirically testing the long-term quantity of money for Canada shows ________.

Examples of inflation hedges include ________.