Here is considered currency (including coins), bank deposits, and travellers' checks. it is the velocity of money. This reflects financial institutions and other economic conditions. it is the deflator. It is a weighted average of the prices of all final goods and services produced in the economy. It is, therefore, the broadest measure of the nation's price level. is the total market value of final goods and services produced in the economy in a year. An increase in the money supply, through its impact on aggregate demand, results in an increase in nominal money. If the velocity of money is held constant, an increase in the nominal value is proportional to the increase in the money supply. To determine the impact of an increase in the money supply on the price/inflation rate, we rewrite equation (2.21) to obtain the equation