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nominal wage rate: $10 in year 1 and $16 in year 2 price level: 1.00 in year 1 and 1.333 in year 2, then real wages using year 1 as the base year are respectively: $10 (= $10/1.00) in year 1 and $12 (= $16/1.333) in year 2. The real wage each year measures the buying power of the hourly wage in common terms.
Thus the money supply function is represented as a vertical line – money supply is a constant, independent of the interest rate, GDP, and other factors. Mathematically, the LM curve is defined by the equation / = (,), where the supply of money is represented as the real amount M/P (as opposed to the nominal amount M), with P representing the ...
[1] [2] Money supply data is recorded and published, usually by the national statistical agency or the central bank of the country. Empirical money supply measures are usually named M1, M2, M3, etc., according to how wide a definition of money they embrace. The precise definitions vary from country to country, in part depending on national ...
In macroeconomics, the classical dichotomy is the idea, attributed to classical and pre-Keynesian economics, that real and nominal variables can be analyzed separately. To be precise, an economy exhibits the classical dichotomy if real variables such as output and real interest rates can be completely analyzed without considering what is happening to their nominal counterparts, the money value ...
The nominal interest rate is a simple way of expressing the cost of a loan or the return on a deposit. The real interest rate accounts for the effect of inflation on the purchasing power of ...
The wage unit is a unit of measurement for monetary quantities introduced by Keynes in his 1936 book The General Theory of Employment, Interest and Money (General Theory). [1] A value expressed in wage units is equal to its price in money units divided by the wage (in money units) of a man-hour of labour.
Generally, the nominal demand for money increases with the level of nominal output (price level times real output) and decreases with the nominal interest rate. The real demand for money is defined as the nominal amount of money demanded divided by the price level. For a given money supply the locus of income-interest rate pairs at which money ...
Definition of financial assets: money, stocks, bonds; Time value of money (present and future value) Functions of money; Measures of money supply; Banks and creation of money; Money demand; Money market; Loanable funds market; Reserve market; Central bank and control of the money supply Monetary policy; Real versus nominal interest rates