The Keynesian demand for real balances can be expressed as
A)Mᵈ = f(i,Y).
B)Mᵈ/P = f(i).
C)Mᵈ/P = f(Y).
D)Mᵈ/P = f(i,Y).

Question

Quizplus · Accepted Answer

The Keynesian demand for real balances is expressed as Mᵈ/P = f(i,Y), where Mᵈ is the demand for money, P is the price level, i is the interest rate, and Y is the income. This formula indicates that the demand for real money balances depends on both the interest rate and income.

The Keynesian Demand for Real Balances Can Be Expressed as