Suppose you postpone consumption and invest at 9% when inflation is 3%. What is the approximate real rate of your reward for saving?
A) 3%
B) 5%
C) 6%
D) 7%
Answer: C
Explanation: C) We can see that an inflation rate of 3% is 6% less than our 9% investment rate. Thus, 6% is the real rate of your reward for saving.
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