Assume that the Cambridge k = .20. If income is equal to $100,000, the transactions demand for money is equal to

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Quizplus · Accepted Answer

The transactions demand for money can be calculated using the Cambridge equation, which is $M = kY$, where $M$ is the demand for money, $k$ is the Cambridge constant, and $Y$ is the income. Given $k = .20$ and $Y = $100,000$, the transactions demand for money is $M = .20 \times 100,000 = $20,000$.

Assume That the Cambridge K =