If the compound inflation rate were greater than the compound interest rate,purchasing power would fall.

Question

Quizplus · Accepted Answer

This is because the inflation rate measures the increase in the average price of goods and services in an economy, while the interest rate measures the cost of borrowing money or the return on savings. If inflation is higher than the interest rate, it means that prices are rising faster than the return on savings or investments, which can lead to a decrease in purchasing power.

If the Compound Inflation Rate Were Greater Than the Compound