People's decision about whether to hold money or bonds can be influenced by the interest rate.

Question

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When interest rates are high, people may prefer to hold onto bonds in order to earn a higher return on their investment. Conversely, when interest rates are low, people may choose to hold onto money rather than investing in bonds, as the potential return on bonds may not outweigh the opportunity cost of giving up immediate access to cash. Therefore, interest rates can play a role in individuals' decisions to hold money or bonds.

People's Decision About Whether to Hold Money or Bonds Can