What is the individual''s average cash balance

Reference no: EM131144718

a. Determine the optimal strategy for cash management for a person who earns $1,600 per month, can earn .percent interest per month in a savings account, and has a transaction cost of $1.

b. What is the individual's average cash balance?

c. Suppose income rises to $1,800. By what percentage does the individual's demand for money change?

Reference no: EM131144718

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