## Quick Reference

The formulation of the quantity theory of money as *M* = *kPY*. Here *M* is the demand for money balances, *P* is the price level, *Y* is the level of real national income, and *k* is a parameter reflecting economic structure and monetary habits, namely the ratio of total transactions to income and the ratio of desired money balances to total transactions. The Cambridge equation is a modified form of the quantity equation, *MV* = *PT*, with *k* = *T*/(*VY*), where *V* is the velocity of circulation and *T* is the real volume of transactions.

*Subjects:*
Economics.

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