Prosperity and Depression.pdf

Chap. 10The Expansion ProcessWhile these time-lags between the earning andIncoRle receiving of incomes, and again between the receivvelocitying and spending of them, are highly relevant tooj monf:J. the determination of the proportion of moneywhich the economic community will hold relativeto its money income, it is not possible to deduce the "averagelag" between the primary and the secondary increases of incomedirectly from the magnitude ofthe average" income-" or " circuitvelocity"ofthe total stock ofmoney, or vice ver!'a. In part, this isbecause a certain portion of the community's cash holding isprimarily a reserve store of value in no close connection with theroutine receipts and disbursements of firms and of individuals.Only a part rises and falls regularly as receipts exceed and fallshort of disbursements as determined by the lags which have beenmentioned. But even ifwe proceed to exclude from considerationthat money which is locked up in hoards, a distinction·must bedrawn· between what may be called average and. marginal time-lagsbetween receipts and disbursements. Our assumption· that nopart ofthe income is saved excluded the possibility of a divergencebetween average and marginal time-lags in the case of incomereceivers.But it is quite likely in the case of business firms that'X/fa receipts will take a longer or shorter time to b