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In the Marshallian ‘cash balances’ version of the quantity theory, M = k PT, M, P, and T have the same meaning as before, and k – the fraction of the community’s wealth or income (Marshall tended to use the terms interchangeably) which on average is held as cash during the period – is the reciprocal of V, the velocity of circulation. The Cambridge equation emphasized not the spending of money, but the role of money as a temporary abode of purchasing power between selling and buying. It was a bridge to the ‘store of value’ function of money by pointing to individual motives for holding liquid assets and suggesting that they could be further analysed.
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