Question

Your savings account pays 1% interest and inflation is 0.5% what's your real rate of return

Answer 1

0.5%

Step-by-step explanation:

Real Rate = Nominal Rate - Inflation Rate

? = 0.5 - 1

0.5

Answer 2

0,5%

Step-by-step explanation:

Real income will be the result of nominal income less inflation. The nominal income is the amount resulting from the nominal interest rate at which your money is invested. For example, an investment of $ 100 at a nominal interest rate of 1% will have a nominal yield of $ 1. If inflation is 0.5% you should discount this from nominal income to find real income. In this case, the real interest rate would be 0.5% and the real yield would be $ 0.50.