The opportunity cost of holding cash in your wallet

A) tends to increase as interest rates decrease.
B) is the foregone interest that could have been earned on other assets.
C) is zero.
D) None of the choices are correct.

Opportunity Cost

The cost of foregoing the next best alternative when making a decision.

Foregone Interest

The potential interest income lost by choosing an alternative investment or spending decision instead of the present option that yields interest.