Suppose the Nominal Interest Rate Is 7 Percent Annually, and You

Multiple Choice

Suppose the nominal interest rate is 7 percent annually, and you deposit $1,000. Inflation in the economy throughout the year is 7 percent. At the end of the year, you have earned:

A) an increase in your purchasing power.
B) no increase in your purchasing power.
C) no increase in your savings.
D) a decrease in your purchasing power.