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

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1. In the ATM model of money, the opportunity cost of holding money is determinedbya. the rate ofinflation.b. the cost of going to anATM.c. the charges levied on every ATMtransaction.d. the nominal interest rate and the possibility of having her moneystolen.ANSWER:d
POINTS:1DIFFICULTY:BasicTOPICS:The ATM Model of the Demand forCashOTHER:Factual2. What is the average cash holdings of someone who visits the ATM once every 8 days and spends \$25 on adailybasis?c
POINTS:1DIFFICULTY:ModerateTOPICS:The ATM Model of the Demand forCashOTHER:Conceptual3. How much is someone who visits the ATM once every 7 days and has an average cash balance of \$70 expectedtospenddaily?d
POINTS:1DIFFICULTY:ModerateTOPICS:The ATM Model of the Demand forCashOTHER:Conceptual
4. Someone who has an average cash balance of \$45 and spends \$15 per day will visit the ATM once ineverydays.4567c
POINTS:1DIFFICULTY:ModerateTOPICS:The ATM Model of the Demand forCashOTHER:Conceptual5. The cost of going to an ATM is \$1 in an economy. If the nominal interest rate in the economy is 5 percent, whatisthe total cost associated with holding cash for an individual who spends \$10 daily and has a 15 percent probabilityofhaving his cash lost or stolen? Assume that he visits the ATM once in every Tdays.a. (182.5/T) + (0.2 ×Tb. (182.5/T) + (0.2 ×Tc. (365/T) + (0.5 ×Td. (365/T) +ANSWER:)))Td
POINTS:1DIFFICULTY:ModerateTOPICS:The ATM Model of the Demand forCashOTHER:Conceptual6. The cost of going to an ATM is \$2 in an economy. If the nominal interest rate in the economy is 1 percent, whatisthe total cost associated with holding cash for an individual who spends \$15 daily and has a 9 percent probabilityofhaving his cash lost or stolen? Assume that he visits the ATM once in every Tdays.))))b
POINTS:1DIFFICULTY:ModerateTOPICS:The ATM Model of the Demand forCashOTHER:Conceptual
7. The nominal interest rate in an economy is 5 percent, and there is also a 15 percent probability of having cash lostorstolen in the economy. Given this information, what is the cost of going to the ATM for an individual who spends\$10daily andhas a total cost of holding cash = (365/T) +T.Assume that the individual visits the ATM once in everydays.Ta
POINTS:1DIFFICULTY:ChallengingTOPICS:The ATM Model of the Demand forCashOTHER:Conceptual

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