Plz, !

when developing a savings plan, what is true about saving and inflation?

to maximize saving, the rate of return for saving should be exactly equal to the rate of inflation.

in order to not lose purchasing power over time, the rate of return for saving should be lower than the rate of inflation.

there is no relationship between saving and inflation.

in order to not lose purchasing power over time, the rate of return for saving should be at least as high as the rate of inflation.

In order to not lose purchasing power over time, the rate of return for saving should be at least as high as the rate of inflation.

Explanation:

The rate of return from savings is the interest rate that deposit-taking institutions offer the depositors. It represents the rate at which their saving will grow per year.

Inflation refers to the general increase in prices in the economy per period.  The inflation rate indicates the rate of price increment in the country. The rate of inflation is expressed as a percentage of the base prices at the beginning of a period. Inflation weakens the purchasing power of a currency.  A unit of currency purchases fewer goods if prices increase.

Should the rate of inflation be higher than the interest rates, it means prices are rising at a higher rate than the rate at which the money is growing.  For the depositors not to lose their purchasing power, the rate of return should be equal to the inflation rate.

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