The modern subjective theory of value was created by William Stanley Jevons, Léon Walras, and Carl Menger in the late 19th century.

Functional Value: This type of value is what an offer does, it’s the solution an offer provides to the customer. Monetary Value: This is where the function of the price paid is relative to an offerings perceived worth. This value invites a trade-off between other values and monetary costs.

Values, attitudes, and norms cause shared consumption. Consumers’ altruistic value orientation will have a positive causal influence on consumers’ personal norms to engage in shared consumption.

The quantity theory of money assumes that the velocity of money is constant. If velocity is constant, its growth rate is zero and the growth rate in the money supply will equal the inflation rate (the growth rate of the GDP deflator) plus the growth rate in real GDP.

Fisher’s quantity theory is best explained with the help of his famous equation of. exchange: MV = PT or P = MV/T. Like other commodities, the value of money or the price level is also determined by the demand and supply of money.

The Fisher Effect is an economic theory created by economist Irving Fisher that describes the relationship between inflation and both real and nominal interest rates. Therefore, real interest rates fall as inflation increases, unless nominal rates increase at the same rate as inflation.

The velocity of money can be calculated as the ratio of nominal gross domestic product (GDP) to the money supply (V=PQ/M), which can be used to gauge the economy’s strength or people’s willingness to spend money.

The money multiplier tells you the maximum amount the money supply could increase based on an increase in reserves within the banking system. The formula for the money multiplier is simply 1/r, where r = the reserve ratio.

Since banks would not be able to make any loans if they kept 100 percent reserves, we can expect that the reserve ratio will be less than one. Hence the money multiplier will be 1/0.2 = 5, and an increase in bank reserves of $ 10 will lead to an increase in deposits of $50.

Money Multiplier = 1/LRR. In the above example LRR is 20% i.e., 0.2, so money multiplier is equal to 1/0.2=5.

The deposit multiplier, also known as the deposit expansion multiplier, is the basic money supply creation process that is determined by the fractional reserve banking system. The bank’s reserve requirement ratio determines how much money is available to loan out and therefore the amount of these created deposits.

The simple deposit multiplier is ∆D = (1/rr) × ∆R, where ∆D = change in deposits; ∆R = change in reserves; rr = required reserve ratio. The simple deposit multiplier assumes that banks hold no excess reserves and that the public holds no currency.

The Money Multiplier refers to how an initial deposit can lead to a bigger final increase in the total money supply. For example, if the commercial banks gain deposits of £1 million and this leads to a final money supply of £10 million. The bank holds a fraction of this deposit in reserves and then lends out the rest.

It is the ratio of the amount of a bank’s checkable deposits—demand accounts against which checks, drafts, or other financial instruments can be negotiated—to its reserve amount. So if the deposit multiplier is 80%, the bank must keep $1 in reserve for every $5 it has in deposits.