Money Growth and Inflation- Macro Topic 5.3

Jacob Clifford explains the two key graphs in macroeconomics: the money market graph and the loanable funds market graph. The money market graph focuses on short-run decision-making, showing how changes in the money supply affect nominal interest rates and GDP. The loanable funds market graph, on the other hand, deals with long-run decision-making, illustrating the supply and demand for loans and the real interest rate. The video also covers the Fisher Effect and the concept of the natural rate of interest, providing a comprehensive understanding of how these graphs interact and their implications in economic theory.

What are the two graphs discussed in the video and what do they represent?

Explain the difference between nominal interest rates and real interest rates.

What is the quantity theory of money and how does it relate to GDP and inflation?

How does an increase in the money supply affect nominal interest rates in the short run?

What happens to the equilibrium nominal interest rate when expected inflation changes?

Describe the Fisher Effect and its significance in the context of loanable funds.

Discuss the concept of the natural rate of interest and its relevance in macroeconomic theory.