If the real interest rate relevant to a bank account is 5 percent and the expected inflation rate is 4 percent,then after a year a person expects to have,relative to today,

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The real interest rate of 5 percent means that the person's money will grow by 5 percent in purchasing power after one year. However, the expected inflation rate is 4 percent, which means that the prices of goods will increase by 4 percent. Therefore, the person can expect to have 9 percent more dollars in their bank account, but these dollars will only purchase 5 percent more goods due to inflation.

If the Real Interest Rate Relevant to a Bank Account