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(a) Consider the Tobin Portfolio Demand for Money Model (not the Baumol-Tobin Transactions Demand for Money Model), and assume that, as in the original Tobin

(a) Consider the Tobin Portfolio Demand for Money Model (not the Baumol-Tobin Transactions Demand for Money Model), and assume that, as in the original Tobin model, interest is not paid on money-holdings. Assume that the individual is initially at her utility- maximizing position. Suppose then that, in the notation of Lecture 2, and both double. How will these changes affect the individual's optimal holdings of bonds and money? Illustrate diagrammatically

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