Price of Money Money Supply

Exchange Rate Accelerate Growth

Interest Rate
Relative to Other Currency Immediate Money Less Expensive

Increase Exchange Rate Export Increases

Interest Rate
Relative to Time
Aggregate Price Level Value of Money Falls
Aggregate Price Level
Relative to Goods and
Services
Slow Growth
Interest Rate
Immediate Money More Expensive

Decrease Exchange Rate Export Slows

Aggregate Price Level Value of Money Rises

Interest Rate &

Money Supply

Nominal Rate Falls

Increase Money Supply

Real Rate Falls

Inflation May Rise Nominal Rate Rises

Exchange Rate
Exchange Rate &
Aggregate Price Level Money Supply

Nominal Rate Depreciate

Increase Money Supply

Real Rate Depreciate

Inflation May Rise Real Rate Appreciate

 M1 Money Supply

Currency in Circulation Demand Deposits

Commercial Bank

Person Deposit $100 Checking Account

Reserve Lending
Loan $90

Person
Money Created

Tools of a Central Bank

Discount Rate

Borrowing

Increase Monetary Base

Money Supply

Borrowing

Decrease Monetary Base

Money Supply
 Reserve
Requirement

Leakage

Increase Money Multiplier

Money Supply

Leakage

Decrease Money Multiplier

Money Supply

Open Market
Orders

Liquidity

Purchase Monetary Base

Money Supply

Liquidity

Sale Monetary Base

Money Supply