The Nominal Interest Rate Is 5% and the Inflation Rate

Multiple Choice

The nominal interest rate is 5% and the inflation rate is 6%.A rational consumer

A) will not save since the real interest rate is negative.
B) will save less than 1% of her income.
C) will save the same amount regardless of the inflation rate; only the nominal interest rate matters.
D) might save despite the negative real interest rate.
E) will necessarily save less if the inflation rate rises and the nominal interest rate does not change.