dse 2009

[anon_econ]

The opportunity cost of holding money (that yields zero nominal return) vis-a-vis some interest bearing bond is:
a) the real interest rate
b) the nominal interest rate
c) the real interest rate when measured in real terms and the nominal interest rate when measured in nominal terms
d) none of the above

[Amit Goyal]

It is the nominal interest rate. Option (b). Its a mistake in the answer key.

[anon_econ]

All right. Thanks.