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
