How is it possible for real rates of return to increase during times when the rate of inflation increases?
A)inflation increased more than the real return
B)nominal returns actually decreased
C)nominal returns increased more than inflation
D)nominal returns increased less than inflation

Question

Quizplus · Accepted Answer

Real rates of return can increase even if the rate of inflation increases if nominal returns increase more than the rate of inflation. Real rates of return are the nominal rates of return adjusted for inflation. Therefore, if nominal returns increase more than the rate of inflation, the real rates of return will also increase.

How Is It Possible for Real Rates of Return to Increase