The foregone interest that one gives up when money balances are held is called which of the following?

Question

Quizplus · Accepted Answer

The opportunity cost of holding money is the foregone interest that one gives up, as money held in balances do not earn any interest. Real income refers to the purchasing power of an individual's income after adjusting for inflation. Real money balances refer to the purchasing power of an individual's money balances after adjusting for inflation. Liquidity preference refers to an individual's preference for holding money balances over other assets due to the ease with which they can be converted into cash.

The Foregone Interest That One Gives Up When Money Balances