Assume you have $1,000 in a savings account at the beginning of the year and the price level is equal to 100.If the price level is equal to 92 at the end of the year,the real value of your savings is closest to
A)$908.
B)$920.
C)$1,087.
D)$1,092.

Question

Quizplus · Accepted Answer

The real value of savings is calculated by adjusting for changes in the price level. If the price level decreases from 100 to 92, it means there is deflation. The real value of the savings is calculated as $1,000 * (100/92) = $1,087.

Assume You Have $1,000 in a Savings Account at the Beginning