Suppose you earn $4,800 a month and spend exactly $160 in each of the 30 days. If your entire earnings are deposited in your checking account at the beginning of the month, then your average quantity of money demanded is

Question

Quizplus · Accepted Answer

The average quantity of money demanded is calculated by taking the average balance in the account over the month. Since you spend $160 daily, you will have $4,800 at the start and $0 at the end. The average balance is ($4,800 + $0) / 2 = $2,400.

Suppose You Earn $4,800 a Month and Spend Exactly $160