11. The payments period and the demand for money Suppose that a worker has an annual...
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11. The payments period and the demand for money Suppose that a worker has an annual income of $60,000. Assume that the worker receives wage payments twice per month. The worker keeps all of these payments in money, does not use any alternative financial assets, and pays for consumption expen- diture of $60,000 per year from money holdings. a. What is the worker's average money balance? b. What would the average money balance be if the worker were paid monthly, rather than twice per month? c. What is the general relation between the payments period and the demand for money? d. How do the results change if the worker puts part of his or her monthly wage payments into a savings account and then makes withdrawals as needed from this account? 11. The payments period and the demand for money Suppose that a worker has an annual income of $60,000. Assume that the worker receives wage payments twice per month. The worker keeps all of these payments in money, does not use any alternative financial assets, and pays for consumption expen- diture of $60,000 per year from money holdings. a. What is the worker's average money balance? b. What would the average money balance be if the worker were paid monthly, rather than twice per month? c. What is the general relation between the payments period and the demand for money? d. How do the results change if the worker puts part of his or her monthly wage payments into a savings account and then makes withdrawals as needed from this account?
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a As per the given information an annual income of workers salary is 60000 So the salary per month 6... View the full answer
Related Book For
Macroeconomics Principles and Policy
ISBN: 9780324586213
11th Edition
Authors: William J. Baumol, Alan S. Blinder
Posted Date:
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