Question

As interest rates rise, _____.

A.bonds and savings accounts become less attractive for investment

B.it becomes more expensive to hold money as cash

C.firms will generally spend their wealth

D.it becomes less expensive to hold money as cash

Answer 1

B.it becomes more expensive to hold money as cash is the correct answer

Answer 2

The answer is: B.it becomes more expensive to hold money as cash

When interest rates rise, the amount of revenue that you can make when making investments would also rise.

This mean that if you choose to hold your money as cash, you would lose all of the potential earning that you might obtain from turning that money into investments. This make your cash has less monetary value compared to investments.