Question
Economics Question on Demand analysis
According to the Baumol-Tobin transaction demand for money approach, the optimum number of transactions is
A
inversely related to income and directly related to transaction costs and interest rate
B
directly related to interest rate and income and inversely related to transaction costs
C
inversely related to income, interest rate and transaction costs
D
directly related to income, interest rate and transaction costs
Answer
directly related to interest rate and income and inversely related to transaction costs
Explanation
Solution
The correct answer is (B) : directly related to interest rate and income and inversely related to transaction costs.