The rate of growth of your purchasing power,after adjusting for inflation,is determined by ________.
A) the nominal rate of interest
B) the risk-free interest rate
C) the periodic interest rate
D) the real interest rate

Question

Quizplus · Accepted Answer

The real interest rate is the rate of interest adjusted for inflation. It represents the growth rate of purchasing power. Therefore, the rate of growth of your purchasing power, after adjusting for inflation, is determined by the real interest rate.

The Rate of Growth of Your Purchasing Power,after Adjusting for Inflation,is