According to the Baumol-Tobin Square-Root Formula, Money Demand for Transactions

question 39

Multiple Choice

According to the Baumol-Tobin square-root formula, money demand for transactions

• A)depends only on the level of income
• B)depends only on the cost of illiquidity
• C)varies inversely with both the interest rate and the level of income
• D)increases as the interest rate decreases or income increases
• E)decreases as the cost of illiquidity increases

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