Essay
According to the Baumol-Tobin demand for money:
a. if interest rates increase by 5 percent, what happens to the demand for money? (Give a specific numerical answer.)
b. if income increases by 5 percent, what happens to money demand? (Give a specific numerical answer.)
c. how does the inability of people to make fractional trips to the bank (e.g., one-half of a trip) alter the predicted income and interest rate elasticities?
Correct Answer:
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a. Money demand is predicted to decrease...View Answer
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Correct Answer:
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