In economics and business, money actually refers to money (as well as other economic goods and services) that is available for usage. It can be saved in electronic form, physical form, or simply spent on a particular short term economic commodity. The value of money therefore is the ability to purchase more commodities at a lower cost of production and earn the same return by doing so.
The problem with most theories of economics that deal with the supply of money is that they fail to distinguish between what is called capital goods and what are called non-traded assets. Capital goods include items like property, accounts receivable, and even raw land. Non-traded assets, on the other hand, are not traded on a day-to-day basis, but rather sit idle until needed. This means that there are two types of economics: physical and capital. Physical is the science of movement of goods and capital; and financial is the science of the storage, reproduction, exchange, and allocation of money and other money-related goods. Therefore, there are two main theories of economics that deal with the supply of money: production theory and information theory.
Production theory assumes that money is produced with the help of the various factors of production. Capital goods, on the other hand, are bought and sold on the market with the help of labour and money that have been added to the value of the good by the buyer. If the theory of production is correct, then interest rates would affect how the value of money changes. Interest rates, according to financial economics, are usually sensitive to external shocks to the economy. Therefore, it is important to keep track of changes in interest rates so that the central bank can intervene quickly if there is a major inflationary trend or deflationary drift.