Ralph puts money in the bank and earns a 5 percent nominal interest rate.If the inflation rate is 2 percent,then after one year,
A) Ralph will have 3 percent more money,which will purchase 5 percent more goods.
B) Ralph will have 3 percent more money,which will purchase 7 percent more goods.
C) Ralph will have 5 percent more money,which will purchase 3 percent more goods.
D) Ralph will have 5 percent more money,which will purchase 7 percent more goods.
Correct Answer:
Verified
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