Emilio is saving for college by putting his summer earnings into a fixed-rate savings account. If inflation unexpectedly increases, then so too will Emilio's summer earnings.

Question

Quizplus · Accepted Answer

If inflation increases, the purchasing power of Emilio's savings will decrease, meaning that he will have less money to spend on college. This would not lead to an increase in his earnings.

Emilio Is Saving for College by Putting His Summer Earnings