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Assume You Save $1,000 in a Bank Account That Pays

Question 44

Multiple Choice

Assume you save $1,000 in a bank account that pays 8 per cent interest per year and the inflation rate is 3 per cent. At the end of the year you have earned


A) a real return of $80.
B) a real return of $50.
C) a nominal return of $50.
D) a negative real return.

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