If the value of your savings is increasing over time,we know that:
A)the real rate of interest is positive.
B)the nominal rate of interest must be at least as big as the real rate of interest.
C)the inflation rate must be lower than the nominal rate of interest.
D)All of these statements are true.

Question

Quizplus · Accepted Answer

If the value of savings is increasing over time, it means that the nominal rate of interest earned on the savings is greater than the inflation rate. This implies that the real rate of interest is positive (option A is true). Additionally, the nominal interest rate must be at least as big as the real interest rate to account for the inflation rate (option B is true). Therefore, options A and B are always true when savings increase over time. Hence, the correct option is D: All of these statements are true.

If the Value of Your Savings Is Increasing Over Time,we