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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, Inflexibility Con Discretion, Mv=PQ Represents Demand for Money, lack of Fed control 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, 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, Inflation Calculates Long Run rate of Inflation= Rate of Growth MS-Rate of Real Income Growth, Mv=PQ Derives P=Price Level, Nominal GDP = P=Price Level, Long Run rate of Inflation= Rate of Growth MS-Rate of Real Income Growth Rule MS low/steady increase Steady inflation, BOND Causes an excess supply in money Desire to spend "STARTS THE INCOME MULTIPLYER WITH RESPECT TO THE MONEY SUPPLY" Increase M=Money Supply, M=Money Supply increase Income, Level income high Increase Consumption Spending, Consumption Spending Increase Aggregate Demand for G&S, BOND Causes an excess supply in money Desire to spend "STARTS THE INCOME MULTIPLYER WITH RESPECT TO THE MONEY SUPPLY" Cosists of Inflation, Nominal GDP = Q=physical quantity of output produced, Long Run rate of Inflation= Rate of Growth MS-Rate of Real Income Growth Rule MS increase=Real Growth NO inflation, Short Run Monetary Shocks Con Discretion, Prevents the Fed from making mistakes pro Rules, Rules VS Discretion