Bob deposits $100 in a bank account that pays an annual interest rate of 5 percent.A year later,Bob withdraws his $105.If inflation was 5 percent during the year the money was deposited,then Bob's purchasing power has not changed.

Question

Quizplus · Accepted Answer

Bob's purchasing power has not changed because the interest earned matched the inflation rate, maintaining the real value of his money.

Bob Deposits $100 in a Bank Account That Pays an Annual