Question
The opportunity cost of holding money is the
price level
real interest rate
velocity of circulation
nominal interest rate
price level
real interest rate
velocity of circulation
nominal interest rate
Answers
GPT-4o mini
The opportunity cost of holding money is the **nominal interest rate**.
When individuals or institutions hold money instead of investing it, they forgo the potential interest they could have earned. Thus, the nominal interest rate represents the cost of holding onto that money rather than deploying it in interest-earning investments.
When individuals or institutions hold money instead of investing it, they forgo the potential interest they could have earned. Thus, the nominal interest rate represents the cost of holding onto that money rather than deploying it in interest-earning investments.