"Money is what money does" this definition of money was given by:

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Accepted Answer

The correct option is 1:
The famous and fundamental definition, "Money is what money does," was put forth by the American economist Francis Amasa Walker. This statement is known as the functional definition of money because it defines money entirely based on its activities and primary role in the economic system, rather than its physical characteristics or material. Walker essentially stated that anything that performs the functions of money—primarily acting as a medium of exchange and measure of value—should be considered money. This practical approach helped to resolve historical debates about what constitutes money and established a simple, timeless principle for its conceptual understanding. The quote emphasizes the active, operational role of money as a vital social and economic instrument.

The incorrect option is 2:
Ralph George Hawtrey was a renowned British economist and a leading authority on monetary theory and trade cycles. While he dealt extensively with the nature and functions of money, he is not the originator of the succinct definition, "Money is what money does." Hawtrey's primary focus was on the mechanism of central banking, credit creation by commercial banks, and the impact of the bank rate on the flow of effective demand and the overall business cycle. His contributions are more analytical and complex, centering on the use of bank credit as money and its role in causing economic fluctuations. His work focused on the dynamics of monetary policy, not this particular simple definition.

The incorrect option is 3:
Geoffrey Crowther, another prominent British economist, is also credited with a well-known functional definition of money, though it is slightly more elaborate and descriptive than Walker's. Crowther's definition is often quoted as: "Money is anything that is generally acceptable as a means of exchange and at the same time acts as a measure and a store of value." This statement comprehensively captures money's standard functions, including its role as a store of value, which is a feature not explicitly covered by the simplicity of Walker's dictum. Crowther’s aim was to provide a complete, descriptive definition of modern money, setting his contribution apart from Walker's foundational principle.

The incorrect option is 4:
John Maynard Keynes is considered the most influential economist of the 20th century, and he revolutionized monetary economics, but he is not associated with this specific quote. Keynes's major contribution to the theory of money focused on the motives for demanding and holding money, famously categorizing them into the transaction motive, the precautionary motive, and the speculative motive. His analysis established money's role as a link between the present and the future and how its supply affects the rate of interest, investment, and ultimately, employment in the economy. This highly analytical and motive-based approach is fundamentally different from Walker's straightforward functional definition.