Economics · Macroeconomics

In the Baumol-Tobin transaction demand for money model, the Square Root Rule for optimum cash balance (C) is given by which formula?

Verified Solution4 OptionsUpdated: October 2026👁️1 View

1C = 2bY√r
2C = √2bY
3C = √2br
4C = √2bYr✓

Correct answer

C = √2bYr

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In the Baumol-Tobin transaction demand for money model, the Square Root Rule for optimum cash balance (C) is given by which formula?

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In the Baumol-Tobin transaction demand for money model, the Square Root Rule for optimum cash balance (C) is given by which formula?

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