Money

Abstract

In a developed ‘market economy’, commodities are not exchanged for one another by direct barter, but indirectly through the medium of money. Because the use of money extends through the whole economy, it is important to ensure that the existing quantity is neither too small nor too large to do the work required of it, and questions of monetary policy have often been the subject of acute controversy. In the following extract, Sir John Hicks traces the development of economists’ views on money and its connection with the working of the economy as a whole.