Which of the following is another name for the Cambridge approach to quantity theory?
Cash balance approach
The Cambridge version of the quantity theory of money was developed by Alfred Marshall, A. C. Pigou and D. H. Robertson.
It stresses the demand to hold money: people keep a fraction k of their money income as cash balances, written as \(M = kPY\).
Because it focuses on cash held, it is also called the cash balance approach.
Irving Fisher’s theory is the transactions approach, \(MV = PT\), which focuses on money spent, not money held.
The Keynesian approach is the liquidity preference theory, and the classical approach refers to the older transactions view.
Hence, Cash balance approach.
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