n the Baumol-Tobin model, if the nominal interest rate is 1%, the consumer's annual income is $36000, and every trip to the bank costs $20, then it is optimal for the consumer to visit the bank ___ times a year. 2 3 4 5

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Business

Hugh Skinner

1 February, 19:29

n the Baumol-Tobin model, if the nominal interest rate is 1%, the consumer's annual income is $36000, and every trip to the bank costs $20, then it is optimal for the consumer to visit the bank ___ times a year. 2 3 4 5

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Kristin Malone · Answer 1

In the Baumol-Tobin model, if the nominal interest rate is 1%, the consumer's annual income is $36000, and every trip to the bank costs $20, then it is optimal for the consumer to visit the bank three times a year.

Explanation:

The optimal number of visit to banks = (iY/2F) 0.5

i = 1% = 0.01

Y = $36000

F = $20.

The optimal number of visit to banks = (iY/2F) 0.5

The optimal number of visit to banks = (0.01 * 36000 / 2 * 20) 0.5

The optimal number of visit to banks = (9) 0.5

The optimal number of visits to banks = 3.

it is optimal for the consumer to visit the bank 3 times a year.