Monday, April 25, 2022

A three-piece set for understanding the money circulation

In this article, we introduce a three-piece set for grabbing the money circulation. The three-piece set is the circular flow diagram, a definition of nominal GDP, and the quantity equation (Fisher's equation of exchange). These items are independent in the modern economics. We integrate them for the money circulation. As a conclusion, we obtain M=G+I=S+T and V=Y/(G+I).


The contents of this article are as follows.

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