Peter and Jane receive the same annual income, but Peter , who gets paid monthly, will have a much higher demand for active balances than Jane, who gets paid weekly.
a. Is this statement true ?
b. Justify your answer.
1
Expert's answer
2016-01-19T08:28:40-0500
The statement is not true, because Peter and Jane receive the same annual income, but Peter gets paid monthly and will have a lower demand for active balances than Jane, who gets paid weekly, because she receive money earlier and more often and has possibility to reinvest money with higher gain.
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