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29 March, 18:52

Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After 1 year, how much would you be able to buy with the money in this account?

a. More than today

b. Exactly the same

c. Less than today

d. I do not know

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Answers (1)
  1. 29 March, 18:59
    0
    C Less than today

    Step-by-step explanation:

    If i save $100 at 1% per annum after 1 year I will get $101, but with inflation rate of 2%per annum a commodity that is worth $100 now will be worth $102 after 1 year so u can't buy same commodity I can buy today after 1 year even when my money has increase.
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