Suppose that banks pay 4 percent interest on checking accounts while U.S.Savings Bonds pay 6 percent interest.Under these conditions
A)no nonmonetary assets are willingly held.
B)a combination of money and nonmonetary assets are willingly held.
C)no money balances are willingly held.
D)we do not have sufficient information to tell whether or not any money balances are willingly held.

Question

Quizplus · Accepted Answer

The higher interest rate offered by U.S. Savings Bonds may incentivize some individuals to hold a combination of money and nonmonetary assets, as they may choose to invest in the bonds while still keeping some money in their checking accounts for more immediate spending needs.

Suppose That Banks Pay 4 Percent Interest on Checking Accounts