Suppose You Can Earn 5 Per Cent on Your Savings

question 10

Multiple Choice

Suppose you can earn 5 per cent on your savings account if you deposit $500 in it. The inflation rate is 3 per cent. The opportunity cost of holding the $500 as money is

• A) $100.
• B) $25.
• C) $80.
• D) $30.
• E) $525.

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