Inflation reached its peak (of at least 14%) in the late 1970s/early 1980s.If this statement is true,then:

Question

Quizplus · Accepted Answer

Inflation erodes the value of money, which means that the same amount of money can buy fewer goods and services than before. Nominal interest rates are the rates which are advertised by banks and financial institutions, and do not take into account the impact of inflation. Real interest rates, on the other hand, are adjusted for inflation and give a more accurate picture of the actual return on investments. Inflation reached its peak in the late 1970s/early 1980s, which means that nominal interest rates during that time were likely very high. However, the real interest rates were actually negative, as the inflated prices reduced the value of money over time. Hence, it is certain that the nominal rate of interest was greater than the real rate, making option B the correct answer.

Inflation Reached Its Peak (Of at Least 14%) in the Late