Question

What would happen to the buying power of your investment after one year if your rate of return was 3% and the rate of inflation was 3%?

Answer 1

Purchasing power is the value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. A rate of return is the annual percentage return realized on an investment, which is adjusted for changes in prices due to inflation or other external effects.
Given:
Rate of return = 3%Rate of inflation =3%
Buying Power = 3% - 3% = 0%
Thus, the buying power will remain same for the year.