Let's define the velocity of money as the (nominal income/volume of money) ratio. Let's say that Baumol Tobin's transactional money demand theory is used to analyze the factors that determine the distribution rate of money.

a. When the average amount of money held is K/2, express the rate of money flow as a function of the amount of money, K, and real income, and Y, which convert the real value of the bond into the amount of money, and briefly explain this result. b. Using the formula for the optimal value of a bond, express the rate of money circulation as expenditure, Y, interest rate, r, and the fee, b, function for converting a bond into currency. c. Briefly explain what happens to the velocity of money when interest rates rise.