The following table shows Uma’s estimated annual benefits of holding different amounts of money: (LO3) How much money will Uma hold on average if the nominal interest rate is 9 percent? 5 percent? 3 percent? Assume that she wants her money holding to be a multiple of $100. (Hint: Make a table comparing the extra benefit of each additional $100 in Average money holdings ($) Total benefit ($) 500 35 600 47 700 57 800 65 900 71 1,000 75 1,100 77 1,200 77 *Denotes more difficult problem. money holdings with the opportunity cost, in terms of forgone interest, of additional money holdings



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