Waec Model Questions Vol1 2021 Economics Question 41

Practice objective / multiple choice question 41 from the 2021 Waec Model Questions Vol1 Economics examination.

Waec Model Questions Vol1 2021 Economics Objective / Multiple Choice Medium Difficulty
Question 41 WAEC_MODEL_QUESTIONS_VOL1 • 2021 • ECONOMICS • objective

At the beginning of the year the Consumer Price Index (CPI) was 120 and at the end of the year it rose to 126. A commercial bank offers a savings account that pays an effective nominal interest rate of 8% per annum. Another investment scheme guarantees a real return of 5% per annum. Which investment will give the higher real return for the year?

Answer Options

A. The investment with a 5% real return and the savings account provide the same real return.
B. The savings account provides a higher real return after adjusting for inflation.
C. The savings account with an 8% nominal rate yields the higher real return.
Correct Answer D. The investment that guarantees a 5% real return yields the higher real return.
Correct Answer
D
Correct Option:
The investment that guarantees a 5% real return yields the higher real return.

About This Question

This is Waec Model Questions Vol1 2021 Economics Question 41. It is one of the objective questions from the 2021 Waec Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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