The opportunity cost of holding money refers to
A. the service fees associated with checking accounts.
B. the pleasure that would have been received if the money balances had been used to buy a good or service.
C. the interest that could have been earned if the money balances had been transferred to an interest-bearing asset.
D. the service fees associated with checking accounts plus the costs undertaken to prevent theft.
Answer: C
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An increase in the money supply will immediately __________ the __________ interest rate, according to the "liquidity effect."
A) raise; natural B) raise; nominal C) lower; natural D) lower; nominal
According to the Gordon-Growth model, what will be the percentage change in the value of the stock of a company whose current dividend is $10
00 and whose dividends had been expected to grow by 3% per year but now are expected to grow by 1% per year? A) -4.0% B) -23.7% C) -31.1% D) -66.0%
f the Fed wants to increase bank reserves, it can:
A. Raise the discount rate. B. Buy government bonds from the public. C. Increase the minimum reserve ratio. D. Decrease the money multiplier.
Price discrimination means charging:
A. the same price to all buyers even if production costs are different. B. higher prices to women and minorities. C. different prices to different buyers for essentially the same good or service. D. different prices for different products because production costs are different.