. 1iWhen money changes hands rapidly, the amount of transactions carried out by a dollar, iiY, is high, and money velocity is high. Assume now that economies A and B are identical: output, 1', and the total supply of money, M are the same, except that money in economy B has a bad odor. The more money you hold the worse is the odor and the more you sufferin direct proportion to your money holdings. Assume that in each economy money demand is proportional to income, and that the money market is in equilibrimn: Md = M. (a) In which country will the velocity of money be higher? Defend your answer. [b] In which country will the price level be higher? Defend your answer and provide intuition for the result. (c) In terms of the BaumolTohin model, how does a worsening of the money odor affect the optimal number of visits to the bank to withdraw money? Explain. (d) Is your answer to (c) the same as for a change in the nominal interest rate? Explain