The opportunity cost of holding money instead of an interest earning asset is the
A) real interest rate.
B) nominal interest rate.
C) inflation rate minus the nominal interest rate.
D) inflation rate.
E) inflation rate minus the real interest rate.

Question

Quizplus · Accepted Answer

The opportunity cost of holding money is the nominal interest rate, as it represents the foregone interest that could have been earned on an interest-bearing asset.

The Opportunity Cost of Holding Money Instead of an Interest