Question

At a ________ interest rate people would hold more funds in cash since the opportunity cost of having cash is low..

Answer 1

low

Step-by-step explanation:

The opportunity cost of having cash is the amount that we can earn from the interest of the deposited funds. If the interest rate is low, the earning from depositing money will not enough to buy goods that more expensive in the future due to inflation. Thus, it is better to hold cash to buy things at present when the prices have not gone up yet.