A Year Ago, You Invested $1,000 in a Savings Account

question 1

Multiple Choice

A year ago, you invested $1,000 in a savings account that pays an annual interest rate of 6%. What is your approximate annual real rate of return if the rate of inflation was 2% over the year?

• A) 4%
• B) 2%
• C) 6%
• D) 3%

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Definitions:

FOB Destination

A shipping term where the seller is responsible for the freight and other transportation costs until the goods reach the buyer’s specified location.

Ownership

The state or fact of exclusive rights and control over property, which can be an object, land/real estate, intellectual property, or some other kind of property.

Debit Balance

An accounting balance where the sum of debits exceeds the sum of credits, typical for assets and expenses.

Sales Tax

A tax paid to a governing body for the sales of certain goods and services usually collected by the retailer at the point of purchase.