If the Purchasing Power of Your Savings Is Increasing Over

question 128

Multiple Choice

If the purchasing power of your savings is increasing over time, we know that:

• A) the real rate of interest is positive.
• B) if the nominal interest rate is zero, inflation must be negative.
• C) the inflation rate must be less than the nominal rate of interest.
• D) All of these statements are true.

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Definitions:

Sign

To write or use a symbol, like one's name, on a document as a way of acknowledging or agreeing to its terms.

Deposits

Sums of money placed in accounts within financial institutions or as security for contracts, which might earn interest over time.

Indorsement

A signature or instruction written on the back of a negotiable instrument, such as a check, transferring ownership or specifying some other transaction.

Bank

A financial institution licensed to receive deposits and provide loans to individuals and businesses.