CHAPTEK 18

CHANGES DUE TO INVESTMENT FACTORS

The causes of disequilibrium to be discussed in thischapter are not always separated by a sharp line fromthose discussed in the preceding chapter, and, after theinitial stage has been passed, they shade off into oneanother. 1 For a disturbance initially due to monetaryfactors will soon set up some disturbance on the in-vestment side, and similarly a disturbance due to in-vestment factors is likely, as we shall see, to causesome modification to monetary factors. But there is,nevertheless, the broad distinction that the formerare due to changes on the supply side and the latter,generally speaking, to changes on the demand side.

Moreover there is a further characteristic of greatimportance which differentiates monetary disturb-ances (whenever, that is to say, the monetary changeis of a quasi-permanent nature) from investment dis-turbances ; namely that the former represents apassage from one equilibrium price-level to another,whereas the latter (even when the investment changeis of a quasi-permanent nature) is an oscillation aboutan approximately unchanged price-level. Thus theformer ends up in a new price structure ; whereas thelatter is calculated to generate an equal and oppositereaction later on. It is this characteristic which

1 This is particularly the case where the change in the supply of moneyfor the Industrial Circulation is due to a change in the requirements of theFinancial Circulation ; which latter should perhaps have been classified as achange due to Investment Factors.

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