Problem
1. Why do people usually maintain some money balances? If you have a checking account, why wouldn't you reduce your money holdings and open an interest-earning savings account? What is the opportunity cost of holding cash?
2. If an individual suddenly found an amount of money equal to his existing cash balance, would he be better off? What if every individual simultaneously found such an amount of cash (equal to their current money holdings)-would they all be better off? Why or why not?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.