Download Long-Term Growth and Inflation

CHAPTER 18
Causes of Long-Term Growth and Inflation
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Exhibit 18-1
Three Stages of Production
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Exhibit 18-2
Generalized Relationship between Inputs and Output
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Exhibit 18-3
Postponing Diminishing Returns
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Exhibit 18-4
The Power of Compounding: Effects of Compounding $1
for 515 Years
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Exhibit 18-5
How Governments Can Promote Economic Growth
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Exhibit 18-6
How Governments Can Impede Economic Growth
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Exhibit 18-7
GDP relationship 1: Nominal GDP ≡ P × Q
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Exhibit 18-8
GDP Relationship 2: Nominal GDP ≡ M2 × V2
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Exhibit 18-9
V2 Is a Derived Value
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Exhibit 18-10
Equation of Exchange
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Exhibit 18-11
GDP Components in Percentage Terms: An Approximation
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Exhibit 18-12
Equation of Exchange in Percentage Terms
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Exhibit 18-13
EOE: Causes of Inflation
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Exhibit 18-14
Causes of Long-Term Changes In M2
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Exhibit 18-15
Factors That Affect the Portfolio Demand to Hold M2 and
the M2 Velocity
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Exhibit 18-16
M2 Velocity in the United States, 1959–2006
Source: Federal Reserve Bank of St. Louis, Economic Data—FRED II, http://research.stlouisfed.org/fred2/
(accessed October 10, 2006).
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Exhibit 18-17
Changes in U.S. M2 Velocity and Inflation Rate,
1959–2006
Source: Federal Reserve Bank of St. Louis, Economic Data—FRED II, http://research.stlouisfed.org/fred2/
(accessed October 10, 2006).
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Exhibit 18-18
Discretionary Change in M2 to Achieve 0% Long-Term
Inflation
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Exhibit 18-19
Monetarism: Inflation Is a Monetary Phenomenon
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Exhibit 18-20
Short-Run Phillips Curve Relationship
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Exhibit 18-21
U.S. Phillips Curve Relationship, 1959–1968
Source: U.S. Department of Labor, Bureau of Labor Statistics, Labor Force Statistics from the Current
Population Survey, Consumer Price Index, http://www.bls.gov/data/home.htm (accessed January 30, 2006).
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Exhibit 18-22
U.S. Inflation and Unemployment, 1959–2006
Source: U.S. Department of Labor, Bureau of Labor Statistics, Labor Force Statistics from the Current
Population Survey, Consumer Price Index, http://www.bls.gov/data/home.htm (accessed October 14, 2006).
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Exhibit M18-1
Labor Market
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Exhibit 18-23
The Natural-Rate Hypothesis
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Exhibit 18-24
Long-Term and Short-Term Phillips Curves, 1959–2006
Source: U.S. Department of Labor, Bureau of Labor Statistics, Labor Force Statistics from the Current
Population Survey, Consumer Price Index, http://www.bls.gov/data/home.htm (accessed October 10, 2006).
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Exhibit 18-25
Changes in the Natural Rate of Unemployment
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Exhibit A18-1
Changes in the Natural Rate of Unemployment
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Exhibit A18-2
Monetary Rule: Target Inflation Rate=0%
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Exhibit A18-3
Can Falling Real GDP Cause Long-Term (30%) Inflation?
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Exhibit A18-4
Can Rising Velocity Cause Long-Term (30%) Inflation?
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Exhibit A18-5
Can Rising Velocity and Falling Real GDP Cause
Long-Term (30%) Inflation?
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Exhibit A18-6
Can Rising Money Supply Cause Long-Term (30%)
Inflation?
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Exhibit A18-7
Inflation in Argentina and Turkey Caused by Excessive
Money Growth*
Source: IMF, International Financial Statistics Online, http://ifs.apdi.net/imf/about.asp (accessed June 6, 2006).
*The money supply figures in Exhibit A18-7 come from the IMF’s ‘‘Money’’ and ‘‘Quasi-money’’ statistics.
Money is defined as currency outside depository banks and demand deposits other than those of the central
government. Quasi-money is defined as liabilities of financial institutions, comprising time, savings, and
foreign currency deposits of resident sectors other than central government.
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