At higher interest rates,____ of holding money is high -transaction costs -opportunity costs -benefits
At higher interest rates,____ of holding money is high
-transaction costs
-opportunity costs
-benefits
Homework Answers
Answer
The correct answer is (b) Opportunity costs
Opportunity cost of holding money is the interest rate foregone because of holding the money instead of putting it to the bank Suppose Interest rate is high then amount of interest foregone is high and hence opportunity cost of holding money is high at higher interest rate and hence Option (b) is correct. Now lets see why others are wrong
Transaction cost is cost incurred due to some transaction made and it has no role of interest rate directly. If you hold money and interest rate is high then there is no benefits to the person he did not put that money on the bank to earn interest. Hence, At higher interest rates there are no benefits of holding money
Hence, the correct answer is (b) Opportunity costs
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At higher interest rates,____ of holding money is high -transaction costs -opportunity costs -benefits
true or false: the higher the short-term interest rate, the lower the opportunity costs holding money
true or false: the higher the short-term interest rate, the lower the opportunity costs holding money
When the interest rate falls: people desire higher money balances as the opportunity cost of holding...
When the interest rate falls: people desire higher money balances as the opportunity cost of holding money decreases. people desire lower money balances as the opportunity cost of holding money decreases. people desire higher money balances as the opportunity cost of holding money increases. people desire lower money balances as the opportunity cost of holding money increases.
The money demand curve is: O Upward sloping because the opportunity cost of holding money rises...
The money demand curve is: O Upward sloping because the opportunity cost of holding money rises with the interest rate. O Downward sloping because the opportunity cost of holding money is inversely related to the interest rate. Downward sloping because the opportunity cost of holding money rises as the interest rate falls. O Downward sloping because the opportunity cost of holding money rises as the interest rate rises.
What is the opportunity cost of holding money? QUESTION 6 According to the quantity theory of...
What is the opportunity cost of holding money?
QUESTION 6 According to the quantity theory of money, if the growth rate of money supply increases by 2 percentage points inflation increases by 2 percentage points and real interest rates increase by 2 percentage points inflation increases by 2 percentage points and nominal interest rates increase by 2 percentage points inflation increases by 1 percentage points and nominal interest rates increase by 1 percentage points inflation increases by 1 percentage points...
1. Which of the following properly describes the interest-rate effect? a. A higher price level leads to higher money demand, higher money demand leads to higher interest rates, and a higher interest rate increases the quantity of goods and serv
1. Which of the following properly describes the interest-rate effect? a. A higher price level leads to higher money demand, higher money demand leads to higher interest rates, and a higher interest rate increases the quantity of goods and services demanded.b. A higher price level leads to higher money demand, higher money demand leads to lower interest rates, and a lower interest rate reduces the quantity of goods and services demanded.c. A lower price level leads to lower money demand, lower...
An increase in interest rates will have this effect on a distributor: a) Higher costs for...
An increase in interest rates will have this effect on a distributor: a) Higher costs for capital investments b) Lower cost for capital investments c) High transportation cost d) Lower transportation cost
Mexican interest rates are normally substantially higher than U.S. interest rates. a. Assuming that interest rate...
Mexican interest rates are normally substantially higher than U.S. interest rates. a. Assuming that interest rate parity exists, do you think hedging with a forward rate would be beneficial if the spot rate of the Mexican peso was expected to decline slightly over time? b. Would hedging with a money market hedge be beneficial if the spot rate of the Mexican peso was expected to decline slightly over time (assume zero transaction costs)? Explain. c. What are some limitations on...
Many people believe that high interest rates are bad for the economy. It is not widely...
Many people believe that high interest rates are bad for the economy. It is not widely known that some benefit from higher interest rates. Who benefits when rates go up? Why can higher interest rates indicate the something positive is happening in the economy? Please use examples to support your posting.
When interest rates decrease: no one benefits from this change. people who are saving money will...
When interest rates decrease: no one benefits from this change. people who are saving money will benefit from this change. everyone benefits from this change. people who are borrowing money will benefit from this change.
When interest rates decrease: no one benefits from this change. people who are saving money will...
When interest rates decrease: no one benefits from this change. people who are saving money will benefit from this change. everyone benefits from this change. people who are borrowing money will benefit from this change.
The money demand curve is: O Upward sloping because the opportunity cost of holding money rises with the interest rate. O Downward sloping because the opportunity cost of holding money is inversely related to the interest rate. Downward sloping because the opportunity cost of holding money rises as the interest rate falls. O Downward sloping because the opportunity cost of holding money rises as the interest rate rises.
What is the opportunity cost of holding money?
QUESTION 6 According to the quantity theory of money, if the growth rate of money supply increases by 2 percentage points inflation increases by 2 percentage points and real interest rates increase by 2 percentage points inflation increases by 2 percentage points and nominal interest rates increase by 2 percentage points inflation increases by 1 percentage points and nominal interest rates increase by 1 percentage points inflation increases by 1 percentage points...
When interest rates decrease: no one benefits from this change. people who are saving money will benefit from this change. everyone benefits from this change. people who are borrowing money will benefit from this change.
When interest rates decrease: no one benefits from this change. people who are saving money will benefit from this change. everyone benefits from this change. people who are borrowing money will benefit from this change.
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