which of the following measures the opportunity cost of holding currency?

Question:- which of the following measures the opportunity cost of holding currency?

Answer: The nominal interest rate refers to the rate of income that could be received if one preferred to invest in interest-earning securities such as bonds or deposits rather than holding on to cash. The opportunity cost involves the returns from interest which people give up, when they possess cash or currency instead of investing in securities. This forgone interest income is the potential benefit of currency holding; the economy gives up the opportunity to earn interest on financial assets. The positive relation between the nominal interest rate and the opportunity cost of holding currency will be steeper since the higher nominal interest rate means the higher potential interest earnings forgone. Thus, the nominal interest rate is taken as the opportunity cost relevant to indebted agents when setting aside balances in currency instead of investing it into interest-bearing assets.