In the Baumol-Tobin Model, the Optimal Number of Trips to the Bank

question 53

Multiple Choice

In the Baumol-Tobin model, the optimal number of trips to the bank is determined by minimizing the total costs of holding money that are the:

• A)forgone interest.
• B)costs of trips to the bank.
• C)forgone interest plus the costs of trips to the bank.
• D)costs of trips to the bank minus the forgone interest.

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Definitions:

Rescission

The act of cancelling a contract and returning all parties involved to their positions prior to the agreement, effectively nullifying the contract's obligations.

Demonstrator

A person who participates in a public protest or demonstration.

Rectification

The correction of a mistake in an agreement that would have rendered the agreement impossible to perform.

Innocent Misrepresentation

A false statement made without knowledge of its falsehood, leading another to enter into a contract under mistaken beliefs, without intent to deceive.