Module 12: Money and Inflation.

Learning Objectives

  1. Understand the meaning of the terms inflation, inflation rate, deflation, disinflation, and hyperinflation.

  2. Understand how to use supply and demand to determine the price level (the quantity theory of money).

  3. Understand the quantity equation and be able to use it to explain the determinants of inflation.

  4. Understand the difference between the real and the nominal interest rate as well as the meaning of the Fisher effect.

  5. Be able to enumerate the costs of inflation as well as explain the way in which inflation is a tax.