r   ). ▁His ▁more ▁elaborate ▁theory ▁( Ch apter ▁ 1 5 ) ▁makes ▁liquid ity ▁preference ▁depend ▁on ▁Y   ▁as ▁well ▁as ▁on ▁r   . ▁He ▁provides ▁no ▁w ▁sub script ▁for ▁income , ▁imp lying ▁that ▁it ▁is ▁specified ▁in ▁money ▁terms , ▁in ▁which ▁case ▁L ▁should ▁also ▁be ▁in ▁money ▁terms ; ▁but ▁this ▁is ▁contrad icted ▁later ▁( p 2 4 6 ) ▁when ▁Ke yn es ▁says ▁that ▁L ▁is ▁in ▁w age ▁units . ▁ ▁Li qu id ity ▁preference ▁and ▁money ▁supply ▁provide ▁the ▁second ▁key ▁equation ▁in ▁Ke yn es ' s ▁system . ▁The ▁L M ▁equation ▁states ▁that ▁▁ ▁in ▁words , ▁that ▁the ▁amount ▁of ▁money ▁in ▁circul ation ▁is ▁equal ▁in ▁equilibrium ▁to ▁the ▁amount ▁demanded ▁at ▁income ▁Y ▁and ▁interest ▁rate ▁r . ▁Both ▁sides ▁of ▁this ▁equation ▁are ▁regarded ▁as ▁ex ogen ous . ▁For ▁most ▁purposes ▁the ▁equation ▁is ▁equally ▁acceptable ▁in ▁money ▁terms ▁and ▁in ▁w age ▁units , ▁since ▁the ▁conversion ▁factor ▁W ▁is ▁itself ▁ex ogen ous , ▁and ▁if ▁a ▁quantity ▁is ▁ex ogen ous ▁in ▁one ▁set ▁of ▁units , ▁and ▁the ▁conversion ▁factor ▁to ▁another ▁set ▁of ▁units ▁is ▁also ▁ex ogen ous , ▁then ▁the ▁quantity ▁is ▁equally ▁ex ogen ous ▁in ▁the ▁second ▁set ▁of ▁units . ▁ ▁The ▁schedule ▁of ▁the ▁marg inal ▁efficiency ▁of ▁capital ▁The ▁' sch edule ▁of ▁the ▁marg inal ▁efficiency ▁of ▁capital ' ▁determ ines ▁how ▁much ▁invest ment ▁will