ABSTRACT

By what means should total money expenditures be controlled? By monetary policy? By fiscal policy through raising and lowering rates of tax and levels of public expenditure? By changes in the rate of foreign exchange or other measures to affect expenditure on UK exports and UK import-competing products? What should be the precise measure of total money expenditures which it was aimed to keep on a steady growth path? Should it be the Gross Domestic Product (i.e. the value of all goods and services produced for consumption, investment, government use, and exports)? Or would it be preferable to aim directly at keeping the total money demand for labour (Le. total wage and salary earnings) on a steady growth path? Above all, in view of the dynamic interrelationships in the economy between taxes, interest rates, foreign exchange rates, prices, outputs, and employment, what are the best rules for operating the monetary, fiscal, or other controls for the purpose of keeping the chosen measure of total money expenditures on its target growth path?