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Questions › CUET-PG › CUET-PG 2023 Shift 1 › Q77
4 marks, −1Macroeconomics › Demand for money and monetary theories › Baumol-Tobin transactions demand for moneyHardabout 2 min

CUET-PG 2023 Shift 1 Question 77: Demand for money and monetary theories

According to the Baumol-Tobin transaction demand for money approach, the optimum number of transactions is

  1. inversely related to income and directly related to transaction costs and interest rate
  2. directly related to interest rate and income and inversely related to transaction costs
  3. inversely related to income, interest rate and transaction costs
  4. directly related to income, interest rate and transaction costs

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Demand for money and monetary theories has come up 82 times in 7 exams since 2005.

What this question tests

This question is on Baumol-Tobin transactions demand for money, part of Demand for money and monetary theories in Macroeconomics.

Money demand as an inventory problem trading interest forgone against transaction costs.

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