How can the Cambridge equation be restated according to Friedman's money demand theory? A)M^d = k(r_B,r_E,r_D)Py B)M^d = k/Py(r_B,r_E,r_D) C)M^d = Py/k(r_B,r_E,r_D) D)M^d = (r_B,r_E,r_D)Py/k

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Quizplus · Accepted Answer

Friedman's restatement of the Cambridge equation incorporates the demand for money as a function of various factors, represented symbolically in the equation, and equates it to the nominal money supply (MS) times the velocity of money (V), which is inversely related to k, a constant representing the fraction of income people wish to hold as money, times the price level (P) and real income (y).

How Can the Cambridge Equation Be Restated According to Friedman's