TOLFA Segment 11, Question 4

In a society whose money is managed by a government, prevailing interest rates on savings accounts are 3% a year, while the supply of paper "money" printed is increased by 4% a year. What happens to the real value of a $10,000 savings account in the first year? It grows to $10,300
It falls to $9,600
It grows to $10,100
It falls to $9,900

Don't hurry away; even when you've got the right answer, try clicking on the others to see why they are wrong! Then when you have correctly answered this make notes in your student notebook, go to Question 5.

Segment 11 Page