How can the Cambridge equation be restated according to Friedman's money demand theory?

a. Md = k(rB, rE, rD)Py
b. Md = k/Py(rB, rE, rD)
c. Md = Py/k(rB, rE, rD)
d. Md = (rB, rE, rD)Py/k

A

Economics

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The marginal benefit to you of drinking one more bottled iced tea is $1.50 . The price of a bottle of iced tea is $1.25. a. If you purchase iced tea you will suffer a net loss of 25 cents per bottle

b. If you purchase a bottle of iced tea, the net gain to you from doing so is 25 cents. c. You will not purchase iced tea if you are acting rationally. d. If you are acting rationally, you will purchase iced tea until the marginal benefit falls to 25 cents.

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