Suppose David has $2,000 in a bank account that pays 3% interest, but inflation rises to 5%.
Which of the following statements is true?
The real rate of return for the money invested in that bank account is negative 2%
The real rate of return for the money invested in that bank account is 2%
The real rate of return for the money invested in that bank account is 4%
The real rate of return for the money invested in that bank account is 5%