Let income be $1,600 billion. If the cost of a deposit transaction is $9 and the opportunity cost of holding money is 4.5 percent, then the average cash balance that minimizes total cost is
A) $360 billion.
B) $400 billion.
C) $540 billion.
D) $600 billion.
E) none of the above.

Question

Quizplus · Accepted Answer

The Answer of Let income be $1,600 billion. If the cost of a deposit transaction is $9 and the opportunity cost of holding money is 4.5 percent, then the average cash balance that minimizes total cost is
A) $360 billion.
B) $400 billion.
C) $540 billion.
D) $600 billion.
E) none of the above.

Let Income Be $1,600 Billion