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Eco 202 ch 31 monetary growth and inflation

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Gale Pooley
Gale Pooley
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When Money Dies
Inflation Cause - Printing money faster than new goods and services are created Effect - Rising prices
Does money create wealth?
More Money Make more stuff Raise prices
Big Mac = 10 SR 1 SR = 1/10 of a Big Mac
= 1 SR =1/10 of a Big Mac
Money Supply Central Bank - SAMA
Dr. Fahad Al Mubarak Chairman of the Board Governor Saudi Arabia Monetary Agency SAMA
5. Greece, Oct. 1944 Highest monthly inflation: 13,800% Prices doubled every 4.3 days
4. Germany, Oct. 1923 Highest monthly inflation: 29,500% Prices doubled every: 3.7 days
A 1000 Mark banknote, over-stamped in red with "Eine Milliarde Mark" long scale (1,000,000,000 mark), issued in Germany during the hyperinflation of 1923
3.Yugoslavia, Jan. 1994 Highest monthly inflation: 313,000,000% Prices doubled every: 1.4 days
1. Hungary 1946 Highest monthly inflation: 13,600,000,000,000,000% Prices doubled every: 15.6 hours
2. Zimbabwe, Nov. 2008 Highest monthly inflation: 79,600,000,000% Prices doubled every: 24.7 hours
1833 - 1932 $18.94 to $20.69
$1,600 80x Lost 98.75% of value relative to gold in 80 Years
Money Demand Liquid Credit Cards ATMs
Money Demand Opportunity Cost Potential Profit
Quantity Theory of Money The quantity of money determines its value Milton Friedman (1912 - 2006)
2.00 Money 1.50 Supply Value of 1.00 Money 0.50 Money Demand 0 1 10 20 30 40 50 Quantity of Money
How to get an A on Exam 4
2.00 Money 1.50 Supply Value of 1.00 Money 0.50 Money Demand 0 1 10 20 30 40 50 Quantity of Money
The Life of a Riyal 18 months
Quantity Equation M xV = P x Q M = Money V = Velocity P = Price Q = Output
Government Spending Tax Borrow Print
Inflation Tax When the government prints more money, anyone who has money loses wealth
Inflation Winners - Borrowers Losers - Lenders
Nominal = Real + Inflation N=R+I If you know two you can calculate the other one If N = 12 and R = 10, what is I?
Formulas N=R+I RR = 1÷ MM RR = 1÷ MM
Facts Saudi Reserve Ratio: 7% Saudi ORR: 2% Saudi Money Supply Growth: 12% Saudi Inflation Rate: 3.9% Country with recent hyperinflation: Zimbabwe Country with recent bank run: Cyprus
Eco 202 ch 31 monetary growth and inflation

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Eco 202 ch 31 monetary growth and inflation