3 o4 THE GENERAL THEORY OF EMPLOYMENT bk. v

out limit whenever there was a tendency for less thanfull employment, the asymmetry would, indeed, dis-appear. But in that case there would be no resting-place below full employment until either the rate ofinterest was incapable of falling further or wages werezero. In fact we must have some factor, the value ofwhich in terms of money is, if not fixed, at least sticky,to give us any stability of values in a monetary system.

The view that any increase in the quantity of moneyis inflationary (unless we mean by inflationary merelythat prices are rising) is bound up with the underlyingassumption of the classical theory that we are alwaysin a condition where a reduction in the real rewards ofthe factors of production will lead to a curtailment intheir supply.

VI

With the aid of the notation introduced in Chapter20 we can, if we wish, express the substance of theabove in symbolic form.

Let us write MV = D where M is the quantity ofmoney, V its income-velocity (this definition differingin the minor respects indicated above from the usualdefinition) and D the effective demand. If, then, V isconstant, prices will change in the same proportion as

the quantity of money provided that e v

(“^) isunity -

This condition is satisfied (see p. 286 above) if e 0 = oor if e m = 1. The condition e w = 1 means that the wage-unit in terms of money rises in the same proportion as

the effective demand, since e w =

DiW

W7D'

and the con-

dition e 0 = o means that output no longer shows anyresponse to a further increase in effective demand, since

e 0 = Output in either case will be unaltered.

Next, we can deal with the case where income-velocity is not constant, by introducing yet a further