All things considered,a saver who earns 6 percent interest on a savings account when the rate of inflation is 6 percent is losing real purchasing power.

Question

Quizplus · Accepted Answer

When the interest rate on a savings account is equal to the rate of inflation, the real purchasing power of the savings remains the same. However, when the interest rate is lower than the rate of inflation, the savings lose real value over time due to the increasing cost of goods and services.

All Things Considered,a Saver Who Earns 6 Percent Interest on a Savings