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Cash Balance Approach
SUBJECT : Economics
PUBLISHED ON : 07/12/13
NUMBER OF PAGES : ( 5 Pages)
PRICE : Rs 3.75

The value of money according to cash balance approach depends on the demand for and supply of money. Price is determined at a point where demand and supply of money are equal. So changes in the value of money can be caused by changes either in its demand or supply or both. Cash balance approach is only an application of general theory of value to the problem of money. The approach considers demand for and supply of at a particular point of time rather than its flow over a period of time the supply of money at particular moment comprises all the cash and bank deposits subject to cheque withdrawal.

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