Assume You Save $1,000 in a Bank Account That Pays

question 151

Multiple Choice

Assume you save $1,000 in a bank account that pays 8 percent interest per year and the inflation rate is 3 percent. At the end of the year you have earned

• A) a real return of $80.
• B) a nominal return of $50.
• C) a real return of $50.
• D) a negative real return.