The benefit of holding money is ________, while the opportunity cost of holding money is ________.
A)the nominal interest rate; the fees charged by banks
B)the nominal interest rate; its usefulness in carrying out transactions
C)increased income; lost purchasing power
D)its usefulness in carrying out transactions; the nominal interest rate

Question

Quizplus · Accepted Answer

Holding money involves a cost-benefit calculation. Money has an opportunity cost because interest is foregone, but money's benefit is liquidity: the ability to make transactions easily.

The Benefit of Holding Money Is ________, While the Opportunity