If some individual gets ₹ 3,000 as her wage on the first day of every month and if she spends exactly ₹ 100 everyday and exhausts all her money by the end of the month, then what would be her approximate average money holding throughout the year?
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Demand for money and monetary theories has come up 82 times in 7 exams since 2005.
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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Question from the JNU SSS 2015 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.