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Business LibreTexts

25: Inflation and Money

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    Chapter Objectives

    By the end of this chapter, students should be able to:

    1. Describe the strongest evidence for the reduced-form model that links money supply growth to inflation.
    2. Explain what the aggregate supply-aggregate demand (AS-AD) model, a structural model, says about money supply growth and the price level.
    3. Explain why central bankers allow inflation to occur year after year.
    4. Define lags and explain their importance.

    Thumbnail: Image by Pete Linforth from Pixabay

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