A savings account pays 4% interest while inflation is 6%. What is most likely to happen over the year?
The purchasing power of the savings falls
The nominal balance must fall by 2%
The real return is positive because interest is paid
The bank must raise its interest rate to 6%
30 exam-style questions on OCR GCSE Economics 3.4 Price stability, covering 3.4.1 Price stability and inflation, 3.4.2 Measuring inflation with CPI, 3.4.3 Calculate the effect of inflation, 3.4.4 Analyse inflation figures, and 3.4.5 Causes and consequences of inflation. Each one has a worked solution and a mark scheme showing where the marks go.