Which of the Following Is True of the Baumol Model

question 12

Multiple Choice

Which of the following is true of the Baumol model? Note that the optimal cash transfer amount is C*.

• A) If the total amount of cash needed during the year increases by 20%, then C* will increase by 20%.
• B) If the average cash balance increases by 20%, then the total holding costs will increase by 20%.
• C) If the average cash balance increases by 20% the total transactions costs will increase by 20%.
• D) The optimal transfer amount is the same for all companies.
• E) If the fixed costs of selling securities or obtaining a loan (cost per transaction) increase by 20%, then C* will increase by 20%.

---

Definitions:

Hollywood Satire

A genre or style of filmmaking that mocks or criticizes the Hollywood film industry, often highlighting its absurdities or contradictions.

Noir

A genre of film characterized by its dark, cynical tone, moral ambiguity, and visual style that emphasizes shadows and stark lighting contrasts.

Classical Studio Era

Period in Hollywood history, approximately from the 1920s to the 1950s, characterized by films produced and distributed by a few major studios.

Major Motion Pictures

Films produced by large studios with significant budgets, typically featuring well-known actors, and intended for a wide theatrical release.