Question

The statement that “currency held in the hand yields no income” is given by

• A. A. C. Pigou
• B. A. Marshall
• C. I. Fisher
• D. J. M. Keynes

Hint:

Irving Fisher emphasized that holding money without circulating it in the economy does not generate income, highlighting the importance of spending for economic activity.

Answer 1

The Correct Option is C

Topic: The Demand for Money
Understanding the Question: Which economist is credited with observing that cash holdings do not generate direct income/interest?
Key Formulas and Approach: This relates to the Opportunity Cost of holding money.
Detailed Solution:
Step 1: Identify the economic thought. Irving Fisher was a pioneer in the Quantity Theory of Money and the relationship between interest rates and inflation.
Step 2: Analyze the quote. Fisher emphasized the "Equation of Exchange." He noted that while currency is a medium of exchange, it is an idle asset if not invested in productive, interest-bearing capital.
Step 3: Contrast with others. While Keynes discussed "Liquidity Preference," Fisher's classical foundations specifically highlighted the non-yielding nature of cash in the hand.
Conclusion: Irving Fisher (C) is the author of this statement.