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:

Human Creations

Innovations, artworks, processes, and inventions that result from human imagination and intellect.

Capital

Resources made and used by people to produce and distribute goods and services, including buildings, machinery, and equipment.

Entrepreneurial Ability

The imagination required to develop a new product or process, the skill needed to organize production, and the willingness to take the risk of profit or loss

Natural Resources

Assets derived from the earth such as minerals, forests, water, and fertile land that can be used for economic gain.