Question 1
The Costs of Inflation
If you are paid an interest rate of 6% on your savings account and the inflation rate is 8%, then you are earning a real interest rate of ________.
◦ -2%
◦ 14%
◦ 2%
◦ 6%
Question 2
The Costs of Inflation
If the nominal interest rate is 7% and the real interest rate is 5%, then the inflation rate is ________. (Round to the nearest hundredth when appropriate.)
◦ 6%
◦ 5%
◦ 12%
◦ 2%