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3.Suppose the Baumol-Tobin model of money demand is correct. Everyone is alike and earn money income...

Question:

3.Suppose the Baumol-Tobin model of money demand is correct. Everyone is alike and earn money income of $30,000/year. Brokers
3.Suppose the Baumol-Tobin model of money demand is correct. Everyone is alike and earn money income of $30,000/year. Brokers charge a fee of $2 for every transaction. The money supply is $1000 per person. What is the equilibrium nominal interest rate? Suppose the Fed wants to reduce the interest rate to 2% (.02). How much of an increase in the money supply per person is necessary to do so?

Answers

Answer Given data. * Baumol- Tobin model of money demand is coddict Everyone income of $30,000 lyead. D do keds clodge of fee

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