Monetary economics

Monetary economics is the branch of political economy that studies the determinants of money supply and demand and their consequences on the real economy.

The need to regulate exchanges without resorting to barter, in complex economic systems, has led mankind to adopt as a medium of exchange in commercial activities an instrument that is easy to produce, transfer, measure and store, money precisely in all its various forms, which is therefore a medium of exchange and functions as a unit of account and as a savings instrument.

Money’s function as a medium of exchange results from the specialization of productive activities, which makes bartering problematic and makes it necessary to find resources to finance productive activity. The adoption of units of account, on the other hand, makes it possible to systematize economic valuations within a social structure. Finally, the availability of hoarding instruments makes it possible to untie the timing of the demand and supply of goods and services according to the even temporal characteristics of those goods and services.

In a monetary economy where there is a good, currency or money, universally accepted in exchanges, transactions are fast and inexpensive.

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