Question

Expecting the inflation rate to be 3%, Tony decides to put his savings in a 12-month certificate of deposit yielding a fixed 6% interest rate. If the actual inflation rate is ________, it can be argued that ________ is (are) worse off.

Answer 1

Answer:

greater than 6%

decreases the capacity to pay

Explanation:

Expecting the inflation rate to be 3%, Tony decides to put his savings in a 12-month certificate of deposit yielding a fixed 6% interest rate. If the actual inflation rate is greater than 6%, it can be argued that decreases the capacity to pay is (are) worse off