Economics 9708 · AS & A Level · Balance of payments

Balance of payments — practice question

During 2012, inflation in Botswana stood at 7.5%. Person X held all of their savings as cash, whereas Person Y placed their savings in a bank account that paid 5.0% interest. By the end of the year, what happened to the real value of their savings?

  • APerson X: decrease; Person Y: decrease
  • BPerson X: decrease; Person Y: increase
  • CPerson X: no change; Person Y: decrease
  • DPerson X: no change; Person Y: increase

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