If the nominal interest rate is higher than the inflation rate,the value of your savings:
A)will increase.
B)will decrease.
C)should remain about the same.
D)Cannot say without knowing the beginning balance of savings.

Question

Quizplus · Accepted Answer

When the nominal interest rate is higher than the inflation rate, the purchasing power of your savings will increase over time. This is because the interest you earn on your savings will exceed the rate at which prices are rising, allowing you to buy more goods and services in the future.

If the Nominal Interest Rate Is Higher Than the Inflation