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What is the opportunity cost of a. holding $30,000 in your checking account (that doesn't pay interest) when the interest rate on interest bearing assets
What is the opportunity cost of
a. holding $30,000 in your checking account (that doesn't pay interest) when the interest rate on interest bearing assets is 10%.
b. holding $30,000 in your checking account (that doesn't pay interest) when the interest rate on interest bearing assets is 20%.
c. Do you think people are more or less likely to hold balances in their checking account in part b, compared to part a? Why?
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