When households reduce their average money balances, they
A)purchase more goods.
B)they earn less interest.
C)incur more opportunity costs.
D)incur more transaction costs.

Question

Quizplus · Accepted Answer

Reducing average money balances means households hold less cash, leading to more frequent transactions to convert other assets into cash, thus incurring higher transaction costs.

When Households Reduce Their Average Money Balances, They