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April 05, 2005
Monetary Economics
The two goods - two prices model actually has an extra price. In an exchange model with n goods, only n-1 prices are necessary. The extra price allow one good (gold, for example) to be the money.
This are a little more complicated in a world of fiat money.
Your textbook is an excellent source of information on this subject.
Posted by bparke at April 5, 2005 09:44 PM