As the interest rate increases,the opportunity cost of holding money __________ and individuals choose to hold __________ money.

Question

Quizplus · Accepted Answer

As the interest rate increases, the return on holding money also increases, making the opportunity cost of holding money higher. Therefore, individuals choose to hold less money. This is because holding money provides no return, whereas investing in interest-bearing assets provides a return.

As the Interest Rate Increases,the Opportunity Cost of Holding Money