Veronica has received a $3,000 gift and is looking for a bank to start a savings account. Which option would be the best for her if the current inflation rate is 2.5%?

A. bank that offers 4% interest

B. bank that offers 3% interest

C. bank that offers 2.5% interest

D. bank that offers 3.5% interest

Question

Mathematics

Wiley

5 May, 12:53

Veronica has received a $3,000 gift and is looking for a bank to start a savings account. Which option would be the best for her if the current inflation rate is 2.5%?

A. bank that offers 4% interest

B. bank that offers 3% interest

C. bank that offers 2.5% interest

D. bank that offers 3.5% interest

+1

Answers (2)

Know the Answer?

Michaela Williamson · Answer 1

B Is your answer

Nathalie · Answer 2

A

Step-by-step explanation:

You are looking for the highest real interest rate, which is the nominal rate minus the inflation rate. With that being said, the lowest interest rate is 2.5%, which wouldn't make her anything. However, the 4% interest rate yields 1.5% real interest, making it the best option.

Veronica has received a $3,000 gift and is looking for a bank to start a savings account. Which option would be the best for her if the current inflation rate is 2.5%?A. bank that offers 4% interestB. bank that offers 3% interestC. bank that offers 2.5% interestD. bank that offers 3.5% interest