Chapter 11. Money and Its Purchasing Power
1. Introduction
Money has entered into almost all our discussions so far.
In Chapter 3, we saw how the economy evolved from barter to indirect exchange.
We saw the patterns of indirect exchange and the types of allocations of income and expenditure
that are made in a monetary economy.
In chapter four, we discussed money prices
and their formation, analyzed the marginal utility of money,
and demonstrated how monetary theory can be subsumed
under utility theory.
In chapter six, we saw how monetary calculation in markets
is essential to a complex developed economy,
and we analyzed the structure of post-income
and Pre-Income Demands for and Supplies of Money on the Time Market.
And from Chapter 2 on, all our discussion has dealt with a monetary exchange economy.
The time has come to draw the threads of our analysis of the market together by completing
our study of money and of the effects of changes in monetary relations on the economic system.
In this chapter we shall continue to conduct the analysis within the framework of the free market economy.