The Tobin mean-variance analysis of money demand is an application of ________.
A) the theory of portfolio choice
B) the equation of exchange
C) a variance-at-risk model
D) A and C only

Question

Quizplus · Accepted Answer

The Tobin mean-variance analysis of money demand is an application of the theory of portfolio choice, which involves weighing the benefits and risks of different investment options. The analysis seeks to determine the optimal allocation of an individual's wealth between money and other assets based on factors such as expected returns, volatility, and correlation with other assets. Option B (the equation of exchange) is a different concept that relates the quantity of money to the price level and the level of real output in the economy, while option C (a variance-at-risk model) is not directly related to Tobin's analysis of money demand.

The Tobin Mean-Variance Analysis of Money Demand Is an Application