In the Baumol-Tobin Model, If the Nominal Interest Rate Is

question 47

Multiple Choice

In the Baumol-Tobin model, if the nominal interest rate is 0.05, the cost of trips to the bank is $12, and expenditures equals $48,000, then average money holdings equal:

• A)$980.
• B)$2,400.
• C)$3,394.
• D)$4,000.

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Definitions:

Principal

A principal can refer to the amount of money being borrowed or the party managing a group, depending on the context.

Negligently Left

Describes a situation where an individual or entity fails to take proper care in doing something, resulting in something being left behind or unattended in a manner that could cause harm or loss.

Mop And Bucket

A basic cleaning tool consisting of a mop for washing and a bucket for holding cleaning water or solutions, commonly used for floor cleaning.

Liability

A legal responsibility or obligation to compensate someone else for harm or damage that has been caused.