It is generally agree, that the demand for real money balances depends on income, nominal rate of interest, and expected inflation. An economy has fallen into hyperinflation a la German 1922-1923, and you are required to estimate the flight from money phenomenon. Which of following demand for real balances is the appropriate choice?

1. (M/P)d=Constant

2.(M/P)d=L(Y,i,E)

3.(M/P)d=L(i,E)

4.(M/P)d=L(E)

1. None of the above is true