Suppose you've just inherited $10,000 from an uncle. You're trying to decide whether to keep the $10,000 in cash (hold it as money) so that you can use it whenever you want or to deposit the entire amount in a savings account for one year. Suppose that the interest rate on a savings account is 7% per year. What would be the opportunity cost of holding the $10,000 as money?

Suppose you've just inherited $10,000 from an uncle. You're trying to decide whether to keep the $10,000 in cash (hold it as money) so that you can use it whenever you want or to deposit the entire amount in a savings account for one year. Suppose that the interest rate on a savings account is 7% per year. What would be the opportunity cost of holding the $10,000 as money?


Suppose you've just inherited $10,000 from an uncle. You're trying to decide whether to keep the $10,000 in cash (hold it as money) so that you can use it whenever you want or to deposit the entire amount in a savings account for one year. 


Suppose that the interest rate on a savings account is 7% per year. What would be the opportunity cost of holding the $10,000 as money?

A. $654 per year

B. $280,000 per year

C. $10,000 per year

D. $7 per year


E. $700 per year

F. None of the above is correct.


Answer Key: E