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Chapter 4 - Monetary Policy and Accounts

Published online by Cambridge University Press:  09 January 2019

Leslie Lipschitz  and
Susan Schadler
Leslie Lipschitz
Affiliation:
Bowdoin College, Maine
Susan Schadler
Affiliation:
Center for International Governance Innovation
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Summary

Money is the source of much confusion in economic thinking. Many people do not differentiate clearly between monetary holdings and command over real resources, between money and real wealth. Casual discussion about money and wealth brings to mind the story of a central bank governor of a high-inflation country who tells his dictatorial president-for-life that the country is running out of money. The governor has in mind hard currency holdings (foreign exchange reserves) that can be used to buy goods, as opposed to local currency that can be produced at will but has become almost worthless over years of high inflation.

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Macroeconomics for Professionals
A Guide for Analysts and Those Who Need to Understand Them
 , pp. 95 - 146
Publisher: Cambridge University Press
Print publication year: 2019

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