ABSTRACT
Monetary matters, including inflation, recession/deflation, and the level of interest rates, are among the most significant in modern macroeconomics. Yet, unlike in the classical period, just what properly is the “thing which answers to the description” of money (Keynes 1930, 1:4; italics in original) continues to be a matter of debate. It is important to decide what properly to call money. A clear definition of money helps to understand the source of its supply, how best to regulate the supply, the nature of money’s demand, and how to apply the classical theory of value outlined in Chapter 2 to explaining the consequences of variations in the demand and supply of money.
