The Cambridge k is all of the following except
A) the reciprocal of the income velocity of money.
B) a transactions demand for money.
C) the fraction of GDP that people wish to hold in the form of money balances.
D) the velocity of money.

Question

Quizplus · Accepted Answer

The Cambridge k is defined as the proportion of nominal income that people desire to hold as money balances, which makes it the same as option C. It also represents a transactions demand for money, which is option B. However, it is not the reciprocal of the income velocity of money, which is the inverse relationship between the money supply and the velocity of money, making option A incorrect. Finally, the Cambridge k is not the same thing as the velocity of money, which is a measure of how quickly money circulates in an economy, making option D incorrect.

The Cambridge K Is All of the Following Except