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If the interest rate is less than the inflation rate, a rational person will never save money.
Interest Rate
The percentage at which interest is paid by borrowers for the use of money that they borrow from a lender.
Inflation Rate
The percentage increase in the general level of prices for goods and services over a certain period, reflecting the decreasing purchasing power of money.
Rational Person
An individual who systematically and logically evaluates options to make decisions that maximize their personal benefit or utility.
- Scrutinize the role of interest rates in shaping decisions about savings and investments.
- Comprehend the effect of the inflation rate on actual income and choices related to consumption.
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Learning Objectives
- Scrutinize the role of interest rates in shaping decisions about savings and investments.
- Comprehend the effect of the inflation rate on actual income and choices related to consumption.
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