When nominal interest rates on financial assets are low,the opportunity cost of holding money is ________,so the quantity of money demanded by households and firms will be ________.
A) high; high
B) high; low
C) low; high
D) low; low

Question

Quizplus · Accepted Answer

When nominal interest rates on financial assets are low, the opportunity cost of holding money is low as well. As a result, households and firms are more likely to hold money rather than investing it in financial assets. Therefore, the quantity of money demanded by households and firms will be high.

When Nominal Interest Rates on Financial Assets Are Low,the Opportunity