Main menu


Financial income and economic transactions

 The economy needs financial income and the division of financial income ratios. We have to know what income data and what are the income factors related to the economy and the relationship of financial income to economic transactions. The economy needs transactions in all economists ’movements.

Financial income

Trade union organizations in developing countries lack credibility and take the government's approach by not taking into account the conditions of employees

And workers.

We find that the deterioration of the situation of income earners, which slowly changes in periods of low purchasing power of money, increases the general level of prices.

As we know that the owners of variable income are the organizers and businessmen.

During periods of high prices and inflation, the national income is redistributed in favor of: the class of regulators and employers.

In the event of lower prices and deflation, the national income is redistributed in favor of: holders of fixed income and slowly changing incomes.

In an economic boom: the total demand for goods and services is much more than the total supply of goods and services.

In the event that the general price level rises, the regulators and investors tend to: Use more factors of production to achieve more

From profits.

The effects of amplification: unusual changes and changes in the structure of the productive apparatus.

Structural shifts and economic disruption.

The tendency of capital to speculate, buy land and real estate, hoard gold, and buy currencies or foreign exchange.

The analysis of the demand pull hypothesis, that is, the sharp rise in demand for goods and services, is up to the economist Vixel.

The term pay spiral.


The partial employment phase, according to Keynes, includes: the presence of untapped productive resources, a flexible production apparatus

The phase of full employment includes: the inability of real production to increase, the increase in demand will be reflected in the increase

General price level.

The decline in actual aggregate demand over the supply of real goods and services reflects deflation.

One way to deal with deflation is to remove the obstacles that lead to narrowing the volume of aggregate demand, and for the monetary authorities to reduce prices

Interest or the so-called cheap money policy and the distribution of social benefits. And reduce the tax burden for some classes

The government is implementing public projects with the aim of providing employment opportunities, increasing the purchasing power, following the general budget deficit policy that

It is at the heart of the treasure theory.

in the markets

One of the most important effects of reducing the value of money on the state’s balance of payments is that it makes its goods and services more popular

And it encourages exporting more and more to the foreign market.

Among the most important forms of devaluation are: implied or surety, express, hot and cold depreciation, depreciation.

Defensive or offensive strategic.

We find that one of the most basic assumptions on which the quantity theory of money was based: supply creates demand that is equal to it.

Towards full employment: the stability of the speed of money circulation and the correlation of the change in the general price level with the change in the quantity of money.


According to the quantity theory of money, every saving must be converted into an investment.

The speed of money circulation is related to constant variables in the short term, which are: population density, communication speed, and means of settlement

Payments and the degree of growth of the monetary and financial markets.

The value of traditional goods is formed in the real sector and is determined by relative prices.

As for the value of their money, it is formed in the monetary sector and is determined according to the general level of prices.

The outlets law belongs to Sai and states: The quantity theory of money is allowed to take its role because it is the only one capable of determining the level.

General price.

The scholar and the head through his study of economic equilibrium: allowed the integration of money into economic theory.

Pareto who based his analysis on utility and options theory: integrating the value of money with the general theory of the value of goods.

The relationship between the quantity of money in circulation and the general level of prices is: direct, direct and proportional.

The exchange equation is for (Fisher), the cash balances equation is for (Marshall), and the equation for real cash balances is for (Peugeot).

Among the most important drivers of the demand for money (the motives for liquidity preference) in Keynes: the demand for money as a transactional motive, the demand for money

Driven by precaution, prudence and caution, the demand for money is motivated by speculation.

And widespread is: the demand for money motivated by transactions, so that the demand is based on it: confidence in unity

One of the most common motives

Money, convenience and ease of use.

Transactions mean: deals that take place at the national economic level, deals that are made by consumers to secure

Their needs for consumer goods and services, the deals made by various economic projects to purchase supplies

And productive activity services

economic transactions

Money necessitated by economic activity for the purposes of transactions is called efficient, functioning money.
As for money that individuals use in transactions that do not create production or income: idle or idle money.
For Marshall's analysis on: income level and volume
It is the motive of the transactions that determines the demand for effective credits that are based on
Trade-offs and cash turnover speed.
We mean the demand for money motivated by transactions: it is the main motive that compels individuals and enterprises to maintain their wealth in an appropriate manner.
Precautionary motive means: what drives individuals and projects to keep cash to cope with emergency circumstances that may occur, and to fill in
Surprising possibilities.
It represents the largest part of total demand for money: the demand for money motivated by transactions. The demand for money motivated by reserves.
And prudence and caution.
The objective of speculation is summarized as: It is an attempt to achieve a greater profit for the mass of sellers or buyers.
One of the characteristics of the demand for money motivated by transactions and reserves according to Keynes: constant demand at a certain level of income, null
Flexibility with respect to the interest rate.
The relationship between the speculative motive for money demand and the level of interest rate is an inverse relationship.
Keynes' interest rate is determined: when the demand for money (liquidity preference) and the money supply (money mass) converge, the curve intersects
Money supply with liquidity preference curve equals actual money supply with aggregate demand.
Demand for money driven by transactions depends on: revenue system, agreement system and duration, structure and degree of banking institutions
Its growth, banking customs and traditions, the degree of integration between economic projects and the timing of cash payments between them.
The demand for money motivated by the transactions is given by the following function: KY = L1 = M1.A
K in the transaction-driven demand for money: denotes the proportion of money held by individuals and enterprises that drive transactions, or
Relative coefficient.
The relative coefficient of K depends on: the payment habits of the society, the extent of the spread of financial and banking institutions, the degree of integration between
Various productive projects.
The most important things that determine the level of the volume of funds to be allocated to reserves: opportunities to obtain credit from the money market
On concessional terms, the degree of capital market growth, the effectiveness of converting financial assets into cash, and the degree of stability in business conditions.
The nominal value of the bond means: the value of the bond at the time of issuance and paid to the owner of the bond on the maturity date, the current value of the bond in
The market, the value that remains constant until the bond's value is liquidated and paid by the issuing authority.
We find that the relationship between the market value of the bond and the current interest rate in the markets is: Inverse.
The market value of the bond is given by the relationship: c = k × q / q.
The more the market value of the bonds tends to increase, the lower the interest rate, and the more the market value of the bonds tends to increase.
The lower the interest rate.
The speculative motive for money is a function: diminishing interest rate.
At a low level of interest, the speculative demand for money becomes infinitely elastic.
Equilibrium in the money market occurs when: The demand for money equals the supply of money, M = L.
We mention one of the most important characteristics of the liquidity trap: When the speculative demand for money becomes infinitely elastic, individuals then prefer
Maintaining liquid cash balances without using them to buy bonds, and when monetary policy loses its effectiveness at times
Changes in the equilibrium interest rate are the result of: changes in the quantity of money, change in income level, change in demand
On the coins to speculate.
The most important factors governing the general price level of Keynes: the volume of returns to the factors of production, the volume of current production, the relationship between
The value of the investment and the volume of saving.
See what forms the boomer gives to his savings: monetary form and financial form.
From the assumptions of the simplified model: actual demand changes with the same amount of money changes, the elements of production are homogeneous and replace some of them
. And that there is a similarity between the units of production factors. According to his assumptions: if the wage increases by a percentage
A complete replacement of 10% increases in prices
Rewards for other factors of production at the same rate 10%.
The Cambridge equation takes the

 following form:

A.N = P (K + r k ')
The quantity theory of money is subject to the following sequence:
The increase in the money supply, the increase in cash expenditures, the rise in prices, the increase in income.
We mention among the most important advantages of Keynes' theory:
The possibility of achieving economic equilibrium is less than full employment in a capitalist economy, Keynes held that actual demand is the variable
Independent primary, balance can be made at or below fully functional level.
A criticism of Keynes' theory: Keynes considered the interest rate ectomorphism of money, not referring to changes in the level of income that
Can affect the interest rate, Keynes believed that the interest rate is determined by only one factor and that is the demand for money motivated
Liquidity preference, Keynes’s monetary theory is partial.
Credit means: the exchange of a present value in exchange for a promise of an equivalent future value.
The emergence and development of the concept of credit was a result of: the emergence of the concept of depository, the emergence of commercial banks.
In contemporary economies, most of the commercial transactions and deals take place: through commercial banks.
We mention among the advantages of credit: saving money and dispensing with the use of legal paper money, providing investment opportunities
Profitable savers, saving individuals and productive enterprises in recessions and depressions from economic collapse and bankruptcy.
In monetary inflation, credit overstatement may result
Disadvantages of credit: Increased credit and its circulation can be a cause
For policy
To support projects with low production efficiency according to
In my production buildup, it might be a cause
To unjustified or unnecessary stealing
Cheap money.