In the medium run,a reduction in inflation causes
A)a reduction in the opportunity cost of holding money.
B)an increase in the opportunity cost of holding money.
C)no change in the opportunity cost of holding money.
D)individuals to switch from holding money to bonds and reduce their real money balances.

Question

Quizplus · Accepted Answer

A reduction in inflation decreases the rate at which the purchasing power of money erodes over time, thereby reducing the opportunity cost of holding money instead of investing it in interest-bearing assets or other investments that could potentially offer higher returns.

In the Medium Run,a Reduction in Inflation Causes