The Opportunity Cost of Holding Money Increases When the

question 109

Multiple Choice

The opportunity cost of holding money increases when the

• A)purchasing power of money increases.
• B)nominal interest rate rises.
• C)price of goods and services decrease.
• D)income of consumers increases.
• E)income of consumers decreases.

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Definitions:

Surplus Amount

The excess of quantity supplied over quantity demanded in a market, often leading to lower prices.

Inferior Good

A type of good for which demand decreases as the income of the consumer increases.

Income Increases

The rise in the amount of money received, typically on a regular basis, for work or through investments.

Law of Demand

A principle stating that, all else being equal, as the price of a good or service increases, the quantity demanded decreases, and vice versa.