EC233 Lecture Notes - Lecture 17: Ceteris Paribus, Procyclical And Countercyclical, Liquidity Preference
Document Summary
Ec233 lecture 17, - hyperinflations are periods of extremely high inflation of more than 50% per month, - many economies both poor and advanced have experienced hyperinflation over the last century, but it has not occurred in the. Three motives: transactions motive: precautionary motive, speculative motive, - distinguishes between real and nominal quantities of money. Keynes largely accepted the quantity-theory view that the transactions component of money demand is proportional to income. But he and other economists also recognized that new methods for payment, referred to as payment technology, could also affect the demand for money, as this allows the private sector to economize on holding money. Precautionary motive: - keynes further recognized that people hold money as a cushion against unexpected wants, - keynes argued that the precautionary money balances people want to hold would also be proportional to income (ceteris paribus).
