<p>M=Money supply</p>
<p>P=Price</p>
<p>k= How much money people wish to hold for each dollar of income = exogenous.</p>
<p>Y = output</p>
<p>M/P= real money balances</p>
<p>Money demand function: (M/P)^d = kY</p>
<p>Why isn't the money demand function called the real money balances demand function?</p>
<p>Thank you.</p>

CC BY-SA 4.0
2022-09-15T14:48:24.517Z
Hi! (M/P)^d = kY seems more like an equation (related to an equilibrium) than an f(x) = ... type function definition. Can you link to a source that claims this as the definition?
Giskard
CC BY-SA 4.0
2022-09-16T09:46:58.453Z
The source tis the lecture presentation from my previous uni
povt
CC BY-SA 4.0
2022-09-16T09:53:20.090Z
Then to resolve your question: it is very likely that the notes or their translation is imprecise.
Giskard
<macroeconomics><mathematical-economics><money-supply>
Why isn't the money demand function called the real money balances demand function?
povt
# Why isn't the money demand function called the real money balances demand function?

(Asked by: username_0 on 2022-09-15)

M=Money supply

P=Price

k= How much money people wish to hold for each dollar of income = exogenous.

Y = output

M/P= real money balances

Money demand function: (M/P)^d = kY

Why isn't the money demand function called the real money balances demand function?

Thank you.

**Tags:** macroeconomics, mathematical-economics, money-supply

> **Comments:**
> **username_1**: Hi! (M/P)^d = kY seems more like an equation (related to an equilibrium) than an f(x) = ... type function definition. Can you link to a source that claims this as the definition?  
> **username_0**: The source tis the lecture presentation from my previous uni  
> **username_1**: Then to resolve your question: it is very likely that the notes or their translation is imprecise.  

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## 0 answers

