Write short notes on Cambridge equations.
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The Cambridge equation is an alternative approach to the classical quantity theory of money. It basically draws a relationship among the amount of goods produced, amount of money, the price level, and how money moves. This equation emphasizes more on money demand instead of money supply.
Mathematically, the Cambridge equation is given as
M^d = k.P.Y
where
P represents the price level
Y represents the real income.
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