In the early 1950s,economist William Baumol demonstrated that a lower interest rate ________ the demand for money in a model without bond speculation ________ a "broker's fee" for conversions between money and bonds.

Question

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In Baumol's model, a lower interest rate raises the demand for money because the opportunity cost of holding money instead of bonds decreases, especially when there is a "broker's fee" for converting between money and bonds.

In the Early 1950s,economist William Baumol Demonstrated That a Lower