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Suppose Your Bank Pays You 5 Percent Interest Per Year

Question 15

Multiple Choice

Suppose your bank pays you 5 percent interest per year on your savings account. If prices increase by 5 percent per year over that time, approximately how much real value do you gain by keeping $100 in the bank for a year?


A) $0
B) $1
C) $3
D) $6

Correct Answer:

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