Chapter_11_Modeling_Money - 1 In the ATM model of money the opportunity cost of holding money is determined by a the rate of inflation b the cost of

# Chapter_11_Modeling_Money - 1 In the ATM model of money the...

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1. In the ATM model of money, the opportunity cost of holding money is determined by a. the rate of inflation.b. the cost of going to an ATM.c. the charges levied on every ATM transaction.d. the nominal interest rate and the possibility of having her money stolen.ANSWER: dPOINTS: 1DIFFICULTY: BasicTOPICS: The ATM Model of the Demand for CashOTHER: Factual 2. What is the average cash holdings of someone who visits the ATM once every 8 days and spends \$25 on a daily basis? cPOINTS: 1DIFFICULTY: ModerateTOPICS: The ATM Model of the Demand for CashOTHER: Conceptual 3. How much is someone who visits the ATM once every 7 days and has an average cash balance of \$70 expected to spend daily? dPOINTS: 1DIFFICULTY: ModerateTOPICS: The ATM Model of the Demand for Cash OTHER: Conceptual
4. Someone who has an average cash balance of \$45 and spends \$15 per day will visit the ATM once in every days. 4567cPOINTS: 1DIFFICULTY: ModerateTOPICS: The ATM Model of the Demand for CashOTHER: Conceptual 5. The cost of going to an ATM is \$1 in an economy. If the nominal interest rate in the economy is 5 percent, what is the total cost associated with holding cash for an individual who spends \$10 daily and has a 15 percent probability of having his cash lost or stolen? Assume that he visits the ATM once in every T days. a. (182.5/T) + (0.2 × Tb. (182.5/T) + (0.2 × Tc. (365/T) + (0.5 × Td. (365/T) + ANSWER: )))TdPOINTS: 1DIFFICULTY: ModerateTOPICS: The ATM Model of the Demand for CashOTHER: Conceptual 6. The cost of going to an ATM is \$2 in an economy. If the nominal interest rate in the economy is 1 percent, what isthe total cost associated with holding cash for an individual who spends \$15 daily and has a 9 percent probability ofhaving his cash lost or stolen? Assume that he visits the ATM once in every T days. ))) )bPOINTS: 1DIFFICULTY: ModerateTOPICS: The ATM Model of the Demand for Cash OTHER: Conceptual
7. The nominal interest rate in an economy is 5 percent, and there is also a 15 percent probability of having cash lost or stolen in the economy. Given this information, what is the cost of going to the ATM for an individual who spends \$10daily and has a total cost of holding cash = (365/T) + T. Assume that the individual visits the ATM once in every days.T aPOINTS: 1DIFFICULTY: ChallengingTOPICS: The ATM Model of the Demand for CashOTHER: Conceptual