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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
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
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
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