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This Concept Map, created with IHMC CmapTools, has information related to: Chapter 9 The Monetarists Rule, Guarantees low long rate of inflation pro Rules, Mv=PQ Represents Demand for Money, Inflexibility Con Discretion, Income GDP/level of Economic Activity v=number of times a dollar of the MS is used to buy a good or a service, lack of Fed control Con Discretion, Mv=PQ GDP/level of Economic Activity v=number of times a dollar of the MS is used to buy a good or a service, Mv=PQ Derives P=Price Level, Inflation Calculates Long Run rate of Inflation= Rate of Growth MS-Rate of Real Income Growth, Nominal GDP = P=Price Level, BOND Causes an excess supply in money Desire to spend "STARTS THE INCOME MULTIPLYER WITH RESPECT TO THE MONEY SUPPLY" Increase M=Money Supply, Long Run rate of Inflation= Rate of Growth MS-Rate of Real Income Growth Rule MS low/steady increase Steady inflation, M=Money Supply increase Income, Level income high Increase Consumption Spending, BOND Causes an excess supply in money Desire to spend "STARTS THE INCOME MULTIPLYER WITH RESPECT TO THE MONEY SUPPLY" Cosists of Inflation, Consumption Spending Increase Aggregate Demand for G&S, Nominal GDP = Q=physical quantity of output produced, Aggregate Demand for G&S Motions Traditional Keynes Money Multiplyer (See Aggregate Demand), Rules VS Discretion, Prevents the Fed from making mistakes pro Rules, Short Run Monetary Shocks Con Discretion