Chapter
15
Twentieth­Century
Economic
Theory
Copyright
2002 by The McGraw­Hill Companies, Inc.
All rights reserved.
15­1
Chapter
Objectives
The
equation
of
exchange
The
quantity
theory
of
money
Classical
economics
Keynesian
economics
The
monetarist
school
Supply­side
economics
The
rational
expectations
theory
Copyright
2002 by The McGraw­Hill Companies, Inc.
All rights reserved.
15­2
The
Equation
of
Exchange
Much
of
the
Keynesian­Monetarist
debate
revolves
around
the
quantity
theory
of
money
which
itself
is
based
on
the
equation
of
exchange
The
equation
of
exchange
and
the
quantity
theory
of
money
are
easy
to
confuse
Perhaps
because
the
equation
of
exchange
is
used
to
explain
the
quantity
theory
of
money
Copyright
2002 by The McGraw­Hill Companies, Inc.
All rights reserved.
15­3