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EQUATION OF EXCHANGE: An equation that specifies the relation between the money supply, the velocity of money, the price level, and real production. The equation is stated as M*V = P*Q, where M is the money supply, V is the velocity, P is the price level, and Q is real production. This equation is a key component of the quantity theory of money, which offers an explanation between the money supply and inflation.

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Lesson 6: Supply | Unit 3: Supply Curve Page: 11 of 19

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  • The supply schedule as a table of price/quantity numbers that illustrate the supply relation and the law of supply.
  • How the supply curve is derived from the supply schedule.
  • How the positive slope of the supply curve reflects the law of supply.
  • The supply curve, and the supply price, as the lower limit of supply space.


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INFLATION RATE

The percentage change in the price level from one period to the next. The inflation rate is most commonly presented as an annual average, the percentage change in the average price level from one year to the next. The two most common price indexes used to measure the price level and the inflation rate are the Consumer Price Index (CPI) and the GDP price deflator. The inflation rate is one of several key indicators of business-cycle instability and the overall health of the macroeconomy, with primary focus on tracking the goal of price stability.

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Today, you are likely to spend a great deal of time driving to a factory outlet seeking to buy either a box of multi-colored, plastic paper clips or several orange mixing bowls. Be on the lookout for neighborhood pets, especially belligerent parrots.
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North Carolina supplied all the domestic gold coined for currency by the U.S. Mint in Philadelphia until 1828.
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