5
QuizMultiple Choice

Inflation, Interest Rates, and Investment Decisions — Quiz

Question 5 • Personal Finance

An investment earns 3% and inflation is 6%. What happens to real value?

Answer
A
It stays the same
B
It doubles
C
It increases
D
It decreases

Explanation

The investment earns 3%, but prices rise by 6% because of inflation. Since inflation is higher than the investment’s return, the money buys less over time, so its real value decreases. The correct choice is “It decreases.”

AI-written and checked against the verified answer.

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