Question

Arrange the following theories in chronological order starting from oldest to latest: 

(A) Keynesian Theory of Demand for Money 
(B) Quantity Theory of Money 
(C) Cambridge Cash Balance Approach 
(D) Modern Quantity Theory of Money 
Choose the correct answer from the options given below: 
 

• A. (B), (C), (D), (A)
• B. (A), (C), (B), (D)
• C. (B), (C), (A), (D)
• D. (C), (D), (A), (B)

Hint:

Understanding the historical development of economic theories helps in tracing the evolution of thoughts on monetary policy and money demand.

Answer 1

The Correct Option is A

Step 1: Theory Overview. 
Theories concerning money will be presented in chronological order.

Step 2: Theory Chronology: 
- (B) The Quantity Theory of Money: Developed by classical and Cambridge economists around the early 20th century. 

- (C) The Cambridge Cash Balance Approach: Introduced by economists such as Pigou in the 1910s. 

- (D) The Modern Quantity Theory of Money: Emerged post-Keynesian revolution, particularly after World War II with the rise of monetarism. 

- (A) The Keynesian Theory of Demand for Money: Developed by John Maynard Keynes in the 1930s. 

Step 3: Final Chronological Order. 
From oldest to newest, the order is: Quantity Theory of Money (B), Cambridge Cash Balance Approach (C), Modern Quantity Theory of Money (D), and Keynesian Theory of Demand for Money (A).

Step 4: Conclusion. 
The correct sequence is (B), (C), (D), (A), corresponding to option (1).