The cost of holding money in the form of cash is
A. Equal to whatever interest you would have received at the bank or other investment alternatives.
B. Always considered by noneconomists when deciding how much money to hold.
C. Negative.
D. Nonexistent.
Answer: A
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According to adaptive expectations theory, which of the following would be the result of expansionary monetary and fiscal policies?
a. There is a short-run reduction in unemployment. b. There is a long-run trade off between inflation and unemployment. c. The inflation rate falls in the long run. d. The economy always operates at the natural rate of unemployment
Bubba is a shrimp fisherman who used $2,000 from his personal savings account to buy a boat and equipment for his shrimp business. The savings account paid 2% interest. What is Bubba's annual opportunity cost of the financial capital that he invested in his business?
a. $20 b. $40 c. $200 d. $400
The opportunity cost of a movement from point N to J would
A. be the lost production of some capital goods.
B. be the lost production of some consumer goods.
C. be slower economic growth in the future.
D. not involve any sacrifice of either capital or consumer goods.
Which of the following would shift the aggregate demand curve to the right?
A. A lower future expected price level B. An increase in foreign income C. An appreciation of the value of a country's currency D. An increase in imports