![]() First we have scarce resources, then the choice about which end to devote them to. ![]() This is a natural view if you think that economic quantities have an independent material existence. In the textbook view, there is no connection between the long-run evolution of potential output with demand. One way to look at this interface is through the concept of potential output, and its relationship to current expenditure, or demand. Seeing the money-game as a self-contained system is the first step the next step is to ask how this system interacts with the concrete activities of production. I write here frequently about "the money view" - the idea that we need to see economic relationships as a system of money flows and money commitments, that is not reducible to the "real" production and exchange of goods and services.
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