Question: Why is the correct answer 1 and not 0 using the Baumol-Tobin model? Please explain in details behind the reasoning. Suppose that an agent receives

Why is the correct answer 1 and not 0 using the Baumol-Tobin model? Please explain in details behind the reasoning.

Suppose that an agent receives a paycheck of 3000 euros each month and spends it evenly during the month. The agent can keep money in the form of cash or in a saving account with a zero nominal interest rate, i=0. Each withdrawal of cash from the account generates a cost of 2 euros, expenditures must be paid with cash. How many withdrawals will the agent optimally make during a month? a. 1 b. 2 c. 4 d. 0x e. 3 The correct answer is: 1

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