To say that interest rates represent the opportunity cost of holding money means that as interest rates rise:
A) the demand for money shifts to the left.
B) the demand for money shifts to the right.
C) there is a movement upward along the demand curve for money.
D) there is a movement downward along the demand curve for money.

Question

Quizplus · Accepted Answer

As interest rates rise, the opportunity cost of holding money increases, leading to a movement upward along the demand curve for money, as people prefer to hold less money and invest more in interest-bearing assets.

To Say That Interest Rates Represent the Opportunity Cost of Holding