According to the Baumol-Tobin model, the demand for money will increase if:
A)automatic teller machines become more readily available.
B)Internet banking becomes widely available.
C)bank service charges increase.
D)real wages decrease.

Question

Quizplus · Accepted Answer

The Baumol-Tobin model suggests that the demand for money increases when the cost of converting bonds to cash (like bank service charges) increases, as people will hold more cash to avoid frequent conversions.

According to the Baumol-Tobin Model, the Demand for Money Will