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In the Baumol-Tobin Model, as Interest Rates Increase ________

Question 44

Multiple Choice

In the Baumol-Tobin model, as interest rates increase ________.


A) the amount of cash held for transaction purposes falls and velocity and interest rates are positively correlated
B) the amount of cash held for transaction purposes falls and velocity and interest rates are negatively correlated
C) the amount of cash held for transaction purposes rises and velocity and interest rates are positively correlated
D) the amount of cash held for transaction purposes rises and velocity and interest rates are negatively correlated

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