In the Marshallian equation of the Cash Balance Approach, M = KPY, the letter 'K' stands for?
Understand the Problem
The question is asking about the meaning of the letter 'K' in the Marshallian equation of the Cash Balance Approach. The user is looking for a specific economic term related to the approach.
Answer
Fraction of real income which people desire to hold in money.
'K' stands for the fraction of real income which people desire to hold in money.
Answer for screen readers
'K' stands for the fraction of real income which people desire to hold in money.
More Information
In the context of the Marshallian equation, 'K' reflects the preference of individuals to hold a certain proportion of their income as cash for transactions.
Sources
- Cambridge equation - Wikipedia - en.wikipedia.org
- Quantity Theory of Money – Cambridge Cash Balance Approach - ecoaim.in
- The Cambridge Equations: The Cash Balances Approach - rtuassam.ac.in
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