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?
A)4%.
B)2%.
C)6%.
D)3%.
E)none of the above.

Question

Quizplus · Accepted Answer

The nominal interest rate is 4%, and with 2% inflation, the real rate of return is approximately 2% (4% - 2%).

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