Suppose prices increase by 3% per year.What nominal percentage return on your savings account would you require to get a 3% real return?
A)3%
B)6%
C)8%
D)9%

Question

Quizplus · Accepted Answer

To get a real return of 3%, we need to earn a nominal return equal to the sum of the inflation rate and the real return. In this case, that's 3% + 3% = 6%. Therefore, we would require a nominal percentage return of 6% to get a 3% real return.

Suppose Prices Increase by 3% Per Year