Over the past year you earned a nominal rate of interest of 8 percent on your money.The inflation rate was 3.5 percent over the same period.The exact actual growth rate of your purchasing power was
A)15.55%.
B)4.35%.
C)5.02%.
D)4.81%.
E)15.04%.

Question

Quizplus · Accepted Answer

The actual growth rate of purchasing power is the nominal interest rate minus the inflation rate. So, 8% - 3.5% = 4.5%.

Over the Past Year You Earned a Nominal Rate of Interest