Suppose You Postpone Consumption and Invest at 9% When Inflation

question 95

Multiple Choice

Suppose you postpone consumption and invest at 9% when inflation is 3%.What is the approximate real rate of your reward for saving?

• A)3%
• B)5%
• C)6%
• D)7%

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Definitions:

Transactions

Financial events that affect the assets, liabilities, or equity of a company and can be measured in monetary terms.

Journal

A record where all financial transactions are entered initially, before being posted to individual accounts in the ledger, following the double-entry bookkeeping.

Chronologically

In the sequence of time, where events or records are arranged in the order of their occurrence.

Journal Entry

A journal entry is a record in accounting that logs all the financial transactions of a business, capturing their effects on the accounts.