ABSTRACT
Up to this point in this book, we have concerned ourselves with flows of income and spending. Flows are measured in units like $/year. The interest rate is determined in the market for financial assets, which are stocks measured in timeless units like $. For example, the value of the real estate I own at the end of this year is a stock. We will simplify reality considerably by considering an economy in which only two assets are available, money and bonds.
