If the Value of Your Savings Is Increasing Over Time,it

question 37

Multiple Choice

If the value of your savings is increasing over time,it must be true that:

• A)the inflation rate is higher than the nominal interest rate.
• B)the inflation rate is lower than the nominal interest rate.
• C)the inflation rate and the nominal interest rate are the same.
• D)the inflation rate must be zero.

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Definitions:

Sales Tax

A tax imposed by a government on the sale of goods and services.

Credit Period

Length of time allowed for payment of goods sold on account.

Discount Period

The time frame in which a payment can be made at a reduced rate.

Contra-revenue Account

An account that offsets revenue accounts on the income statement, such as sales returns, allowances, and discounts.