Inflation—Deflation
Fixed Money Supply - Wheat Production Decreases

Wheat Production Decreases

Shoe Production Fixed 0.00%/Month
Wheat Production Decreases -1.50%/Month
Money Supply Fixed 0.00%/Month

In this example the production of wheat declines.

Inflation-Deflation

Sales decline. Dollar prices increase. As expected.

Direct Exchange

Inflation-Deflation

Wheat and shoe direct exchange prices move in opposite directions as expected.

Let's sum up changes in a fixed money supply environment on the next page.