partD 2.a) Obtain and explain the optimal number of withdrawals formula for an individual agentwith a savings account.Answers....b) Calculate the optimal number of withdrawals of a consumer who earns £5,600 per monthwith a saving account earning 0.7 per cent interest and has a transaction cost of £1.Answer.c) Derive and define the real demand for money with optimal transactions embodied. Usingthe data in (b) with x = 0.75, calculate the amount. If the price level is P = 1.14, what is|the nominal value of money held with each withdrawal?Answers....d) Suppose that the nominal rate of interest increases to 1.4 per cent in (b) on account ofthe ending of forced saving from the pandemic crisis with the rate of inflation rising, doesthe optimal number of withdrawals change? What is the effect on the real demand formoney per month? Why do these results appear?Answers...

Interest rate: It refers to the rate at which money from the banks and from the other people will be…

d) Suppose that the nominal rate of interest increases to 1.4 per cent in (b) on account of the ending of forced saving from the pandemic crisis with the rate of inflation rising, does the optimal number of withdrawals change? What is the effect on the real demand for money per month? Why do these results appear?

d) Suppose that the nominal rate of interest increases to 1.4 per cent in (b) on account of the ending of forced saving from the pandemic crisis with the rate of inflation rising, does the optimal number of withdrawals change? What is the effect on the real demand for money per month? Why do these results appear?

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter16: Monetary Policy

Section: Chapter Questions

Problem 1SQP

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