Your friend has just started a savings account that is currently paying 5% interest. if inflation is expected to be 7% this next year, your friend will be earning aa) nominal return of 7% and a real return of 5%.

b. nominal return of 5% and a real return of 5%.

c. nominal return of 12% and a real return of 5%.

d. nominal return of 5% and a real return of - 2%.

Question

Andre Miller

6 September, 19:49

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Answers (1)

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Ishaan Fernandez · Answer 1

The answer is c. nominal return of 12% and a real return of 5%.