The cost of holding money by individuals A. Loss of real value of money due to deflation B. Foregone…
Holding money sacrifices interest, alternative asset returns and the opportunity to consume now: B, C, D. Deflation increases, rather than reduces, the purchasing power of a…
Choose your answer
The cost of holding money by individuals
A. Loss of real value of money due to deflation
B. Foregone interest from savings
C. Utility foregone by not buying goods and services
D. Returns foregone by not holding other assets
Answer and explanation
Correct answer A
Holding money sacrifices interest, alternative asset returns and the opportunity to consume now: B, C, D. Deflation increases, rather than reduces, the purchasing power of a fixed nominal balance, so A is false. The only code excluding A includes B, C, D. B, C and D only A, B and C only A, B and D only A, C and D only 1. B, C and D only 2. A, B and C only 3. A, B and D only 4. A, C and D only
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UGC NET Economics