If the real value of your savings is decreasing over time, we know that the:
A) real rate of interest is positive.
B) inflation is zero.
C) real rate of interest is negative.
D) real rate of interest is zero.

Question

Quizplus · Accepted Answer

When the real value of savings is decreasing over time, it means that the inflation rate is higher than the nominal interest rate. This implies that the real rate of interest is negative, i.e., the purchasing power of savings is decreasing.

If the Real Value of Your Savings Is Decreasing Over