Governments have legal tender {money}, for paying taxes and all debts public and private.
demand
People need money for money transactions, as precaution against future, and as substitute for security speculation. Businesses need money to purchase materials and invest in capital.
interest rate
The money market sets interest rate, based on savings supply and investment demand. Demand from people and businesses raises money interest rate from lenders. Higher saving by people and businesses lowers interest rate.
savings
Savings grow if people and businesses choose future consumption over current consumption. If people and businesses choose future production over current production, they make investments. Savings are available for investment.
GNP
Interest rate varies directly with GNP, because businesses want to invest more if GNP is high.
money supply
Interest rate varies inversely with money supply, because, if more money is available, money value goes down, by marginal-utility principle.
People can accumulate savings, capital ownership, or natural-resource ownership {wealth}|. People have labor value, depending on education, training, natural ability, and labor-supply restrictions. People can benefit from taxation policy, by paying lower taxes, receiving subsidies, receiving benefits, or avoiding expenses. Wealth, labor, and tax policy are the three income sources. Income is price for wealth or labor use. Income varies by supply and demand, as does price.
Money {currency}| is a good that people can exchange at any place and time {complete liquidity}.
Corporation property, minus outstanding bonds and preferred stock, is corporation net value {equity capital}| {stockholders' equity}.
Premiums are for taking risks, or rewards are for innovation {profit}|. Profit can be justifiable. Demand increase or cost decrease before market returns to equilibrium can cause accidental profit.
Guaranteed return and probable return have different interest rates {risk premium}|.
Not purchasing consumer goods or services {saving}, rather than consuming, can accumulate money for future purchases or security.
Business actions or court decisions can cause people to gain or lose money {vested interest}.
poverty {penury}|.
wealth as evil {mammon}.
Businesses have expected return rate {marginal efficiency of investment} (MEI) on latest dollar invested {investment}|. Current interest rate, profit availability, and business-cycle changes affect MEI. Purchasing capital, rather than consumer, goods can make more money in future.
Capital decreases value over time {capital depreciation} {depreciation}|, as it wears out, becomes obsolete, or requires repairs. Businesses must replace capital, or capital supply decreases over time. Net capital formation is gross capital formation minus depreciation.
In France, people can invest in an annuity fund, and, if a member dies, his or her shares distribute to the other members {tontime}.
Prices are relative to base price {price index}|. Capital-good prices are relative to base price {wholesale price index}. Consumer-good prices are relative to base price {consumer price index}. Price index tends to increase over time.
price {valuation}.
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Date Modified: 2022.0225