ABSTRACT
The system of traditional economics may be called a static one. It was concerned with the interrelation of the supply, demand and prices of commodities and factors of production at a given point of time. Economic dynamics is concerned with an entirely different set of relations. The system of economic dynamics, or, the theory of economic growth, may be introduced by setting out the most fundamental equation. An economic planning agency has two traditional weapons, namely monetary and fiscal policy. The monetary weapon inevitably has an influence on interest rates. Economic dynamics are concerned with the mutual relations of the growth of the various parts of the system. There were strong dynamic elements in the writing of the early classical economists. In economic dynamics it is quite evident that the investment of capital abroad is a favourable item in a country's balance of payments and an unfavourable one in the balances of the countries receiving the capital.
