Friday's Savings & Interest Video Questions

What is a direct benefit of putting money into a savings account with an interest rate?

• Your money will lose value over time.

• Your money will earn additional funds.

• You will have immediate access to all your money in a shoebox.

• Your purchasing power will always decrease.

What is inflation?

• An increase in the price of a single good or service.

• A decrease in the average price level of many goods and services.

• An increase in the average price level of many goods and services.

• A fluctuation in the stock market.

In the bucket analogy for purchasing power, what does the 'leak' represent?

• Interest payments

• Inflation

• Savings deposits

• Withdrawals

How is the real interest rate calculated?

• Nominal Interest Rate + Inflation Rate

• Nominal Interest Rate - Inflation Rate

• Inflation Rate - Nominal Interest Rate

• Nominal Interest Rate multiplied by Inflation Rate

Are you enjoying the video lesson?

• Yes

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What is the real interest rate on money kept in a shoebox if the nominal interest rate is 0% and the inflation rate is 3%?

• 0%

• 3%

• -3%

• 1%

If a loan has a 5% nominal interest rate and the inflation rate is 3%, what is the real interest rate for the borrower?

• 8%

• 2%

• -2%

• 5%

Who benefits from unexpected inflation when interest rates are fixed?

• Lenders

• Borrowers

• Savers

• Banks

What is the Federal Reserve's long-term goal for the inflation rate?

• 0%

• 1%

• 2%

• 3%