Leon Walras
What is the role of money in Walras' general equilibrium and what determines the demand for it?
Leon Walras is considered by many as the founder of the modern theory of general economic equilibrium. Money and its valuation is an important element in his Elements of Pure Economics of 1874. Money can be defined most basically as one type of circulating capital; the other is circulating physical capital. In this short essay, both the role of …
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…oviding the service of being a temporary refuge of income between sales and purchases, when goods are to be delivered in the future. One can also understand that interest rate, which depends on the total supply of money, drives the demand for money. Although this essay dealt only briefly with the role of and demand for money and in a general equilibrium system, it has covered the basic ideas behind Walras's theory.
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