If the purchasing power of your savings increases over time:
A) the real rate of interest is positive.
B) you'll be able to buy more with your savings in the future than you can now.
C) the inflation rate must be less than the nominal rate of interest.
D) All of these statements are true.

Question

Quizplus · Accepted Answer

If the purchasing power of your savings increases over time, it means that the real rate of interest is positive, which is statement A. This also means that you'll be able to buy more with your savings in the future than you can now, which is statement B. Finally, for this to happen, the inflation rate must be less than the nominal rate of interest, which is statement C. Therefore, all three statements are true.

If the Purchasing Power of Your Savings Increases Over Time