The Baumol-Tobin Square-Root Formula Predicts That If Banks Levy Hefty

Multiple Choice

The Baumol-Tobin square-root formula predicts that if banks levy hefty fees for withdrawals made from savings accounts, then

A) the income velocity of M1 will most likely increase
B) the amount of money balances held as M1 will most likely decrease
C) the income velocity of M2 will most likely decrease
D) the amount of money balances held as M2 will most likely be unaffected
E) all of the above