The real interest rate tells you
A)how fast the number of dollars in your bank account rises over time.
B)how fast the purchasing power of your bank account rises over time.
C)the number of dollars in your bank account today.
D)the purchasing power of your bank account today.

Question

Quizplus · Accepted Answer

The real interest rate adjusts the nominal interest rate (how fast the number of dollars in your bank account rises over time) to remove the effects of inflation, thereby showing how fast the purchasing power of your bank account rises over time.

The Real Interest Rate Tells You