Question

Oscar has deposited $4,000 in a savings account at 1.5% interest. What is his real interest rate if the current inflation rate is 2.5%?

a. −1%
b. 4%
c. 3.75%
d. −0.6%

Answer 1

A. -1%

Explanation:

If the inflation is 2.5% and the savings account had an original 1.5% interest rate, simply subtract.

1.5 - 2.5 = -1

-1%

Answer 2

-1%

Explanation:

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