Explain Why the Interest Rate Is the Opportunity Cost of Holding

question 171

Essay

Explain why the interest rate is the opportunity cost of holding currency. What is the benefit of holding currency?

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Definitions:

Current Taxes

Taxes that are due and payable within the current fiscal or tax year.

Personal Income Taxes

Taxes imposed on individuals or households by the government based on their income, where the tax rate increases as the taxable amount of income increases.

Adult Americans

Adult Americans refer to individuals within the United States who are legally recognized as adults, typically 18 years of age or older.

Tax Liability

The total amount of taxes owed by an individual, corporation, or other entity to a taxing authority such as the government.