Assume that the Cambridge k = 0.2. If income increases by $20,000, the demand for money will change by

Name: Assume that the Cambridge k = 0.2. If income increases by $20,000, the demand for money will change by
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The Cambridge equation for money demand is $M = kY$, where $M$ is the demand for money, $k$ is the Cambridge constant, and $Y$ is income. Given $k = 0.2$ and an increase in income ($Y$) of $20,000, the change in money demand ($\Delta M$) is $0.2 \times 20,000 = 4,000$.

Assume That the Cambridge K = 0