As the interest rate falls, people hold ________ money in non-interest-bearing checking accounts instead of savings accounts because the opportunity cost of holding money has ________.

Question

Quizplus · Accepted Answer

When the interest rate falls, the opportunity cost of holding money (i.e., the foregone interest earnings from not keeping money in an interest-bearing account) decreases, making it more attractive for people to hold money in non-interest-bearing checking accounts.

As the Interest Rate Falls, People Hold ________ Money in Non-Interest-Bearing