You Plan to Make Annual Deposits into a Bank Account

question 110

Multiple Choice

You plan to make annual deposits into a bank account that pays a 5.00% nominal annual rate.You think inflation will amount to 2.50% per year.What is the expected annual real rate at which your money will grow?

• A)1.98%
• B)2.20%
• C)2.44%
• D)2.68%

---

Definitions:

U.S. Constitution

The supreme law of the United States that outlines the national frame of government and the fundamental rights of its citizens.

Necessary and Proper Clause

A provision in the U.S. Constitution granting Congress the power to pass all laws deemed necessary and proper for executing its enumerated powers.

Full Faith and Credit Clause

A constitutional mandate requiring states to recognize and respect the public records, judicial proceedings, and legislative acts of other states.

Brady Handgun Violence Prevention Act

Federal legislation that requires background checks on individuals before a firearm purchase to prevent firearms sales to prohibited buyers.