The opportunity cost of holding money
A)decreases when the interest rate decreases,so people desire to hold more of it.
B)decreases when the interest rate decreases,so people desire to hold less of it.
C)increases when the interest rate decreases,so people desire to hold more of it.
D)increases when the interest rate decreases,so people desire to hold less of it.

Question

Quizplus · Accepted Answer

When the interest rate decreases, the opportunity cost of holding money decreases because people are giving up less interest income by holding money instead of investing it. Therefore, people desire to hold more money.

The Opportunity Cost of Holding Money