228 THE GENERAL THEORY OF EMPLOYMENT bk. iv

natives;— -i.e. a x + q x , a 2 - c 2 and / 3 will be equal. Thechoice of the standard of value will make no differenceto this result because a shift from one standard toanother will change all the terms equally, i.e. by anamount equal to the expected rate of appreciation (ordepreciation) of the new standard in terms of the old.

Now those assets of which the normal supply-priceis less than the demand-price will be newly produced;and these will be those assets of which the marginalefficiency would be greater (on the basis of their normalsupply-price) than the rate of interest (both beingmeasured in the same standard of value whatever it is).As the stock of the assets, which begin by having amarginal efficiency at least equal to the rate of interest,is increased, their marginal efficiency (for reasons,sufficiently obvious, already given) tends to fall. Thusa point will come at which it no longer pays to producethem, unless the rate of interest falls pari passu. Whenthere is no asset of which the marginal efficiencyreaches the rate of interest, the further production ofcapital-assets will come to a standstill.

Let us suppose (as a mere hypothesis at this stageof the argument) that there is some asset ( e.g. money)of which the rate of interest is fixed (or declines moreslowly as output increases than does any other com-modity’s rate of interest); how is the position adjusted?Since a x + q u a 2 - c 2 and l z are necessarily equal, andsince l 3 by hypothesis is either fixed or falling moreslowly than q j or - r 2 , it follows that a 1 and a 2 must berising. In other words, the present money-price ofevery commodity other than money tends to fall re-latively to its expected future price. Hence, if q x and- c 2 continue to fall, a point comes at which it is notprofitable to produce any of the commodities, unless thecost of production at some future date is expected to riseabove the present cost by an amount which will coverthe cost of carrying a stock produced now to the dateof the prospective higher price.