If the nominal interest rate is higher than the inflation rate, the value of your savings:
A) will increase.
B) will decrease.
C) should remain about the same.
D) cannot be determined without knowing its starting balance.

Question

Quizplus · Accepted Answer

When the nominal interest rate is higher than the inflation rate, the value of your savings will increase in real terms as the interest earned will be greater than the decrease in purchasing power due to inflation.

If the Nominal Interest Rate Is Higher Than the Inflation