chapter  XXII
21 Pages

Monetary Policy

At any one time in a modern developed free enterprise economy there will be a market for money and for various forms of capital asset of the kind depicted in Table VII. There will be various kinds of real and of financial assets issued and offered to the market by the real world (e.g. land, plant, equipment, etc.), by productive enterprises, by the government, by banks, and by other financial intermediaries. There will be various potential holders of these assets, namely individual citizens, productive enterprises, the government, banks and other financial intermediaries coming on to the market to invest their wealth in, and to hold, these various assets. The prices of these various assets relatively to each other-a set of relationships which can be expressed by the money price of each asset, if we take the asset 'money' as our numeraire-will move from day to day as the conditions of supply or of demand for the various assets change.