You put money into an account. One year later you see that you have 5 percent more dollars and that your money will buy 6 percent more goods.
a. The nominal interest rate was 11 percent and the inflation rate was 5 percent.
b. The nominal interest rate was 6 percent and the inflation rate was 5 percent.
c. The nominal interest rate was 5 percent and the inflation rate was −1 percent.
d. None of the above is correct.