If the compound inflation rate were greater than the compound interest rate, future purchasing power on our savings would fall.

Question

Quizplus · Accepted Answer

Compound inflation rate measures the increase in the price of goods and services over time while compound interest rate measures the increase in the value of savings over time. If the inflation rate is greater than the interest rate, the purchasing power of savings would decrease because inflation erodes the value of money.

If the Compound Inflation Rate Were Greater Than the Compound