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Explain the weaknesses of Cambridge cash balance approach.

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It is argued that other influence such as rate of interest, wealth, expectations regarding future interest and price were not formally introduced in this through they remained in the background of the theory.
Income elasticity of demand for money may be well far from unitary no theoretical reason was provided for equating it with unity and there is no empirical evidence supporting unitary elasticity. Changes in price may well be non proportional to changes in money demand

Kavungya answered the question on March 26, 2019 at 05:35

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Explain the weaknesses of Cambridge cash balance approach.

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