Unformatted text preview: fore ATMs and credit cards, this person goes to the bank once at the beginning of each
four-day period and withdraws from her saving account all the money she needs for four days. Assume that
she spends $4 per day.
(a) How much does this person withdraw each time she goes to the bank? Compute this person’s money
holdings for days 1 through 4 (in the morning, before she spends any of the money she withdraws). (2
marks) (b) What is the amount of money this person holds, on average? (1 mark)
Suppose now that with the advent of ATMs, this person withdraws money once every two days. (c) Recomputed your answer to part (a). (2 marks)
2 ECON 2123: Macroeconomics (d) Problem Set 2 Instructor: Yao Li Recomputed your answer to part (b). (1 mark)
Finally, with the advent of credit cards, this person pays for all her purchases using her credit card. She
withdraws no money...
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- Fall '13
- Monetary Policy