Answer to Question #146756 in Economics for Sana

Question

According to the inventory theoretic approach to the transaction demand for money, how would you expect the amount of money an individual demanded for transactions purposes to be affected by:
a. An increase in interest rate paid on bonds
b. An increase in the brokerage fee for bond market transactions.
c. An increase in income.

Answer 1

a. An increase in interest rate paid on bonds will the amount of money an individual demanded for transactions purposes.

b. An increase in the brokerage fee for bond market transactions will decrease the amount of money an individual demanded for transactions purposes.

c. An increase in income will increase the amount of money an individual demanded for transactions purposes.