In our outline of the liquidity preference theory of interest we have already put forward a definition of the money supply. This definition, however, was stated dogmatically and the principles underlying it were never discussed. At the same time we made reference to the concept of liquidity. Our task in this chapter is to examine the concepts of money and liquidity in more detail and thus explain and justify the brief references made in the course of our earlier analysis.
KeywordsMoney Supply Government Bond Treasury Bill Bank Deposit Money Stock
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