CHAPTER 17. THE THEORY OF TIME-VALUE

1. Give examples of a high cost for the use of wealth without the borrowing of money.

2. Give some examples of the neglect of repairs through lack of resources, and show how it involved time-value.

3. What would be some of the first effects on production if interest on money loans fell to one half its present rate?

4. Which is the more important for the rate of interest, the amount of money in the banks or the amount of goods in the country?

5. How would the rate of interest be affected if the amount of money were doubled at once?

NOTE.--In an interesting article on "Prestige Value," by L. M. Keasbey, in _Quarterly Journal of Economics_, May, 1903, has been developed one phase of the thought in Sec. II, proposition 2.

The very active recent discussion of "the interest problem" has done much to clarify economic theory; but almost the entire recent literature of the subject (as seen from our point of view) is based on a defective concept of capital. See in _Quarterly Journal of Economics_, Vol. XVII, pp. 163-180 (November, 1902), article entitled "The 'Roundabout Process' in the Interest Theory," the author's criticism of Böhm-Bawerk's _Positive Theory_. All the recent "marginal productivity" interest theories are at fault, we venture to say, in trying to derive income from capital instead of deriving the amount of capital from rent.