Candas made an investment with a 10% annual yield. However, the real growth rate of her investment was only 8.2%. What was the inflation rate?
A) 1.66%
B) 3.35%
C) 4.27%
D) 6.12%

Question

Quizplus · Accepted Answer

The real growth rate can be calculated using the formula: Real Growth Rate = Nominal Growth Rate - Inflation Rate. Rearranging the formula to find the inflation rate gives us: Inflation Rate = Nominal Growth Rate - Real Growth Rate. Substituting the given values: Inflation Rate = 10% - 8.2% = 1.8%. The closest option to 1.8% is 1.66%.

Candas Made an Investment with a 10% Annual Yield