John's optimal money balance has increased.This could have been caused by

Question

Quizplus · Accepted Answer

An increase in John's optimal money balance implies that he is holding more money than before. This could be because the opportunity cost of holding money has decreased due to a decrease in the interest rate. When interest rates are lower, the return on holding money is relatively higher compared to other investments such as bonds, thereby making holding money more attractive.

John's Optimal Money Balance Has Increased