When We Have Inflation, the Opportunity Cost of Holding Nominal

question 10

Multiple Choice

When we have inflation, the opportunity cost of holding nominal money balances is

• A)the real interest rate
• B)the nominal interest rate
• C)the nominal interest rate or the inflation rate, whichever is higher
• D)the nominal interest rate minus the rate of inflation
• E)the yield on long-term government bonds

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Definitions:

Attitudes

Psychological tendencies expressed by evaluating a particular entity with some degree of favor or disfavor.

Stereotypes

Widely shared beliefs about the characteristic traits, attitudes, and behaviors of members of various social groups (racial, ethnic, or religious), including the assumption that the members of such groups are usually all alike.

Cognitions

The mental action or process of acquiring knowledge and understanding through thought, experience, and the senses.

Learned

Acquired knowledge or skills through experience, study, or being taught.