Suppose That the Nominal Interest Rate Was 3 Percent and the Inflation

question 107

Multiple Choice

Suppose that the nominal interest rate was 3 percent and the inflation rate was 1 percent. What happened with the value of savings?

• A) The dollar value of savings increased at 1 percent, and the value of savings measured in goods increased at 2 percent.
• B) The dollar value of savings increased at 2 percent, and the value of savings measured in goods increased at 3 percent.
• C) The dollar value of savings increased at 3 percent, and the value of savings measured in goods increased at 2 percent.
• D) The dollar value of savings increased at 4 percent, and the value of savings measured in goods increased at 3 percent.