In theory, the velocity of money should rise with the cost of holding it. To assess the

Question:

In theory, the velocity of money should rise with the cost of holding it. To assess the theory, plot the of holding M2 – defined as the difference between the three-month Treasury bill rate (FRED code: TB3MS) and the interest rate on M2 components (FRED code: M2OWN) and (on the right scale) the percent change from a year ago of M2 velocity (FRED code: M2V). What do you conclude?

Opportunity Cost
Opportunity cost is the profit lost when one alternative is selected over another. The Opportunity Cost refers to the expected returns from the second best alternative use of resources that are foregone due to the scarcity of resources such as land,...