When You Accumulate More Money

question 60

Multiple Choice

When you accumulate more money,

• A) the marginal benefit of holding money decreases.
• B) the opportunity cost of holding money decreases.
• C) your marginal tax rate falls.
• D) you earn a lower rate of interest on your checkable deposit.
• E) the interest rate you are paid on your currency increases.

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Definitions:

Deposits

Funds placed into an account at a financial institution for safekeeping and often to earn interest.

Federal Reserve

The central banking system of the United States, responsible for monetary policy, regulating banks, maintaining financial stability, and providing banking services to governmental institutions.

Board of Governors

The Federal Reserve System’s governing body.

Federal Open Market Committee

A branch of the Federal Reserve that oversees open market operations, including the buying and selling of government securities, to influence the money supply and interest rates.