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What would happen to the buying power of your investment after one year if your rate of return was 8% and the rate of inflation was 3%?

-The buying power would decrease by 1%

-The buying power would increase by 11%

-The buying power would increase by 5%

-The buying power would increase by 8%

Verified Answer :

Rate of return = increase buying power

Inflation rate = decrease buying power

Based on that, the buying power would increase by 5 %

8% - 3 % = 5 %

Hope this helps

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