Question

When interest rates on treasury bills and other financial assets are low, the opportunity cost of holding money is _______, so the quantity of money demanded will be _______.
A. Low; low
B. Low; high
C. High; low

Answer 1

Answer:

A. Low; low

Explanation:

When interest rate on treasury bill and other financial asset is low , that means , there is less demand of money  in the market . It implies that the opportunity cost of holding money is low . The opportunity cost of holding money is return on treasury bill which is stated to be low. It happens so because demand of money is low in the market.