Periodic yield and Quantity theory of money: Difference between pages

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A rate of return - or cost of borrowing - expressed as the proportion by which the amount at the end of the period exceeds the amount at the start.  
''Economics''. 
A theory formalised by Irving Fisher, which links the level of prices with the amount of money in circulation.  


==Example 1==
It is defined as: P = MV/T, where P = price level, M = amount of money in circulation, V = velocity of circulation and T = volume of transactions.  
GBP 1 million is borrowed.  


GBP 1.03 million is repayable at the end of the period.  
Monetarists believe that it is the amount of money in circulation which has the biggest effect on price levels and inflation rates.


== See also ==
* [[Fisher's equation]]


The periodic yield (r) is:
(End amount / start amount) - 1
= (1.03 / 1) - 1
= 0.03
= 3%
A rate of return - or cost of borrowing - expressed as the proportion by which the amount at the end of the period exceeds the amount at the start.
==Example 2==
GBP  0.97 million is borrowed.
GBP 1.00 million is repayable at the end of the period.
The periodic yield (r) is:
(End amount / start amount) - 1
= (1.00 / 0.97) - 1
= 0.030928
= 3.0928%
==See also==
*[[Annual effective rate]]
*[[Discount rate]]
*[[Periodic discount rate]]
*[[Yield]]

Revision as of 14:20, 23 October 2012

Economics. A theory formalised by Irving Fisher, which links the level of prices with the amount of money in circulation.

It is defined as: P = MV/T, where P = price level, M = amount of money in circulation, V = velocity of circulation and T = volume of transactions.

Monetarists believe that it is the amount of money in circulation which has the biggest effect on price levels and inflation rates.

See also