Multiple Choice
Suppose the nominal interest rate is 4 percent annually, and you deposit $1,000. Inflation in the economy throughout the year is 5 percent. At the end of the year, you have earned:
A) a real rate of return of 1 percent.
B) an increase in your purchasing power.
C) a nominal increase in your savings of $40.
D) All of these statements are true.
Correct Answer:
Verified
Correct Answer:
Verified
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