the opportunity cost of holding money is the?

Question

price level
real interest rate
nominal interest rates

Answer 1

The opportunity cost of holding money is primarily the real interest rate.

When you hold money instead of investing it in interest-bearing assets, you forgo the returns that you could have earned on those assets. The real interest rate is the nominal interest rate adjusted for inflation, and it reflects the actual purchasing power of the returns lost by not investing the money.

Thus, among the options provided, the correct answer is the real interest rate.