When the rate of inflation is equal to the interest rate on beth's deposit, the purchasing power of her depositrises over the course of the year?

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Baird

18 October, 14:56

When the rate of inflation is equal to the interest rate on beth's deposit, the purchasing power of her depositrises over the course of the year?

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Elsa Oconnell · Answer 1

Her purchasing power over the year remains the same.

Since the prices (inflation) rise with the same pace as the value of the money (interest rate), Beth can keep buying the same amount of products. Her purchasing power remains equal.