A year ago,you invested $1,000 in a savings account that pays an annual interest rate of 4%.What is your approximate annual real rate of return if the rate of inflation was 2% over the year?

Question

Quizplus · Accepted Answer

The nominal interest rate is 4%, and the inflation rate is 2%. The real rate of return is approximately the nominal rate minus the inflation rate, which is 4% - 2% = 2%.

A Year Ago,you Invested $1,000 in a Savings Account That