Question : Macroeconomic help!! Can you check my answers?
Suppose you’ve just inherited $ 10000 from a relative. You’re trying to decide whether to put $ 10000 in a non-interest-bearing checking account so that you can use it whenever you want (hold it as money), or to use it to buy a U.S Treasury bond.

Q1) Suppose the interest rate on the bond is 5% per year. What would be the opportunity cost of holding the $ 10000 as money?

a. $ 500 per year
b. $ 5 per year
c. $ 200000 per year
d. $ 10000 per year

Now suppose the interest rate fell to 2% per year. This would cause the opportunity cost of holding the $ 10000 as money to ____ to ______per year.

My answer:

a, decrease, $ 200

Q2) What does the above analysis suggest about the market for money?

a. The quantity of money demanded increases as the interest rate falls.
b. The supply of money is independent of the interest rate.
c. The equilibrium interest rate is determined by the intersection of the money demand and money supply curves.

My answer:

C
interest bearing checking accounts

Best answer:

Answer by John
Q1
Correct!
Q2 Correct!
You’re on the right track!