Abstract
IN 1952 Baumol presented a simple inventory-theoretic approach to the transactions demand for money. If Y denotes the predetermined value of transactions, with an interest rate of r, and a constant transactions cost of a, the individual chooses equally spaced withdrawals of C to minimize total holding cost of cash. This cost is a T/C + r(C/2), where C/2 is the average money holding and r(C/2) is the opportunity cost of holding it. This total cost is minimized, if C is continuous, when
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