When the opportunity cost of holding money increases, then
A)people want to hold more money.
B)the real interest rate falls.
C)people want to hold less money.
D)the nominal interest rate falls.
E)the quantity of money supplied increases.

Question

Quizplus · Accepted Answer

When the opportunity cost of holding money increases, typically due to higher interest rates, people prefer to hold less money and invest in interest-bearing assets instead.

When the Opportunity Cost of Holding Money Increases, Then