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September 19, 2021 

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INFLATION CAUSES: Inflation is a persistent increase in the economy's average price level. The two basic types (or causes) of inflation: demand-pull inflation and cost-push inflation. Demand-pull inflation, as the name clearly indicates, results when economy-wide shortages are created by increases in aggregate demand. Cost-push inflation results when an economy-wide shortages are created by decreases in aggregate supply, which are so named because they are more often than not triggered by increases in production cost.

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Lesson 19: Money Creation | Unit 2: Fred Returns Page: 9 of 23

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  • Reviewing Fred the Goldsmith, that Fred has developed several modern banking functions: safekeeping, depository, lending and fractional-reserve banking functions.
  • Fred's system of tracking gold flows by issuing receipts for each deposit.
  • The three main features of Fred's system:
    • Knights need not withdraw the same gold deposited.
    • Fred need not personally know each knight requesting services.
    • These gold receipts are as good as gold and become money.
  • Two options Fred has to make a loan:
    • Loan some gold from the safe which could be deposited back in return for receipts.
    • To loan the receipts directly.
  • The importance of fractional-reserve banking and Fred's ability to create money that is used for investment and economic growth.

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AGGREGATE EXPENDITURES EQUATION

An equation that summarizes the four aggregate expenditures on gross domestic product by the four macroeconomic sectors. In the study of Keynesian economics, this equation is commonly used to summarize the demand side of the macroeconomy. The aggregate expenditures equation actually comes in three different versions depending on how many of the four sectors and their expenditures are included.

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Today, you are likely to spend a great deal of time at a garage sale seeking to buy either decorative garden figurines or a wall poster commemorating last Friday (you know why). Be on the lookout for strangers with large satchels of used undergarments.
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The average length of a "business lunch" is about 36 minutes.
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