Answer to Question #64068 in Macroeconomics for kobe

Question

According to the model of optimal cash management, would rich individuals differ from poor ones in their demand for money?

Answer 1

I think, the rich people differ from poor ones in their demand for money, because, according to the model of optimal cash management, the demand for money - a demand for real money balances is directly proportional to the level of costs. The same as the level of costs for the rich individuals are so high than for poor people, that`s why demand for money for the rich differ from poor ones. And demand for money is so high.