the economics of money, banking, and financial markets

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4. 
   

   The Baumol-Tobin analysis suggests that an increase in the brokerage fee for buying and
   selling bonds will cause the demand for money to ____ and the demand for bonds to
   ____.
   A) increase; increase
   B) increase; decrease
   C) decrease; increase
   D) decrease; decrease
   Answer: B
   Diff: 2 Type: MC Page Ref: 21A- 2
   Skill: Recall
   Objective List: 21.2 Define the theories of the demand for money

   
   


5. 
   

   The Baumol-Tobin analysis suggests that a decrease in the brokerage fee for buying and
   selling bonds will cause the demand for money to ____ and the demand for bonds to
   ____.
   A) increase; increase
   B) increase; decrease
   C) decrease; decrease
   D) decrease; increase
   Answer: D
   Diff: 2 Type: MC Page Ref: 21A- 2
   Skill: Recall
   Objective List: 21.2 Define the theories of the demand for money

   
   


6. 
   

   In the Baumol-Tobin analysis of transactions demand for money, either an increase in
   ____ or a decrease in ____ increases money demand.
   A) income; interest rate
   B) interest rates; brokerage fees
   C) brokerage fees; income
   D) interest rate; income
   Answer: A
   Diff: 2 Type: MC Page Ref: 21A- 2
   Skill: Recall
   Objective List: 21.2 Define the theories of the demand for money

   
   


7. 
   

   In the Baumol-Tobin analysis of the demand for money, either an increase in ____ or an
   increase in ____ increases money demand.
   A) income; interest rates
   B) brokerage fees; interest rates
   C) interest rates; the price level
   D) brokerage fees; income
   Answer: D
   Diff: 2 Type: MC Page Ref: 21A- 2
   Skill: Recall
   Objective List: 21.2 Define the theories of the demand for money