Suppose that you have received $650 as a birthday gift. You can spend it today or you can put the money in a savings account for a year and earn 2 percent interest. The opportunity cost of spending the money today, in terms of what you could have after one year, is

A) $0.
B) $13.00.
C) $652.00.
D) $663.00.

Opportunity Cost

The financial implication of not selecting the following best possibility when faced with a decision.

Interest

The cost of borrowing money, typically expressed as a percentage of the amount borrowed, paid by borrowers to lenders.

Savings Account

A deposit account held at a bank or other financial institution providing principal security and a modest interest rate.