Over the past year, you earned a nominal rate of interest of 8% on your money. The inflation rate was 3.5% over the same period. The exact actual growth rate of your purchasing power was
A. 15.55%.
B. 4.35%.
C. 5.02%.
D. 4.81%.
E. 15.04%.
B. 4.35%.
r = (1 + R)/(1 + I) – 1; 1.08/1.035 – 1 = 4.35%.
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