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18 June, 14:30

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) A bank that offers 4% interest

B) A bank that offers 3% interest

C) A bank that offers 2.5% interest

D) A bank that offers 3.5% interest

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  1. 18 June, 16:04
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    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.
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