Classical dichotomy

The classical dichotomy is a way of thinking about different types of money. It says that money can either be either money-in-your-hand (such as coins or cash) or it can be something like a bank account where your money is kept but you can't actually hold it. This idea comes from something called the "classical model of economics," which is an old way of looking at how money works. Basically, money-in-your-hand is "real money" because you can actually touch it and use it right away. Bank account money is "made-up money" because it always needs to be backed up by the real money.