A decrease in the nominal interest rate ________ the opportunity cost of holding money.
A) increases
B) decreases
C) can increase or decrease
D) None of the above answers is correct because the nominal interest rate does not affect the opportunity cost of holding money.

Question

Quizplus · Accepted Answer

A decrease in the nominal interest rate decreases the opportunity cost of holding money because it reduces the foregone interest earnings on savings or investments.

A Decrease in the Nominal Interest Rate ________ the Opportunity