Business, 27.06.2020 02:01 thedocgalloway

Suppose you've just inherited $10,000 from a relative. You're trying to decide whether to put the $10,000 in a non-interest-bearing checking account so that you can use it whenever you want (that is, hold it as money), or to use it to buy a U. S. Treasury bond. Suppose the interest rate on the bond is 5% per year. a) What would be the opportunity cost of holding the $10,000 as money?
b) Suppose the interest rate fell to 2% per year. What would happen to the opportunity cost of holding the $10,000 as money?
c) What does this previous analysis suggest about the market for money?

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Suppose you've just inherited $10,000 from a relative. You're trying to decide whether to put the $1...

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