Investment, an exact science

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Monograph

Identifikator:: 865521182

URN:: urn:nbn:de:zbw-retromon-48767

Document type:: Monograph

Author:: Lowenfeld, Henry

Title:: Investment, an exact science

Place of publication:: London

Publisher:: The Financial Review of Reviews

Year of publication:: 1906

Scope:: 1 Online-Ressource (X, 160 Seiten)

Collection:: Economics Books

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Document type:: Monograph

Structure type:: Chapter

Title:: Chapter V - The practical construction of investment schemes

Collection:: Economics Books

THE “QUANTITY THEORY” 67 increased when we only mean that people are taking more of it because they can get it cheaper. It is obvious, however, that it is not this kind of increase of demand that we have in mind when we discuss the effect of increase of demand upon values. We could not say in the same breath that increase of demand for houses raises the value of houses, and that a fall in the value of houses causes an increase of demand for them. We can, however, say in the same breath, that increase of demand raises the value of houses, and that the fall of value extends the demand for them (or, vice versa, a rise of value contracts the demand). No more in the case of currency than in any other case does the increase of supply defeat itself by causing increase of demand. It only extends demand, inducing people to hold more currency because the fall of value makes it possible to hold larger amounts with equal sacrifice and necessary to hold larger amounts to secure equal convenience. Granted that the Quantity Theory is right in asserting that increase of quantity, demand remaining the same, will raise prices and diminish the value of currency, the ne-* question is *“ How much will any given increas: > quantity diminish the value of the currenc? Tis, of course, depends on what is now called * / economists, following Marshall, the “elasticity of the demand” for currency. The demand for a thing is regarded as being the more elastic the more it will extend on any given fall of price, or, to put the same thing in what for our present purpose is a more useful way, the less difference any given addition to the amount put on the market wi" make to the price, the more elastic is the demand. _f the demand were such that an increase of supply would always cause an exactly reciprocal fall in the value of the article, the elasticity

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