What should an individual compare when deciding how much money to hold?
A) the disadvantage of liquidity with the advantage of earning more interest
B) the advantage of liquidity with the disadvantage of losing interest
C) the disadvantage of storing wealth with the advantage of having a medium of exchange
D) the advantage of storing wealth with the advantage of having a medium of exchange

Question

What should an individual compare when deciding how much money to hold?  
A) the disadvantage of liquidity with the advantage of earning more interest 
B) the advantage of liquidity with the disadvantage of losing interest 
C) the disadvantage of storing wealth with the advantage of having a medium of exchange 
D) the advantage of storing wealth with the advantage of having a medium of exchange

Quizplus · Accepted Answer

An individual should consider the advantage of liquidity (being able to access funds easily) with the disadvantage of losing interest by not holding enough money. Holding too much money can also have a disadvantage of not earning enough interest. Therefore, finding the balance between liquidity and interest earning potential is important when deciding how much money to hold.

What Should an Individual Compare When Deciding How Much Money