If Your Bank Pays You a Nominal Interest Rate of 2.5

question 17

Multiple Choice

If your bank pays you a nominal interest rate of 2.5% on funds in your savings account and the rate of inflation is 4%, what is the real rate of return on your savings?

• A)+6.5%
• B)+2.5%
• C)+1.5%
• D)-1.5%
• E)-4.0%

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