Purchasing power, Differential compounding rate

1)If the compound inflation rate were greater than the compound interest rate, the purchasing power would (Points: 1)
a. fall
b. rise
c. remains unchanged
d. none

If the stated or nominal interest rate is 10 percent and the inflation rate is 5 percent, the differential compounding rate would be _____________ percent (Points: 1)
a. ten
b. five
c. two
d. fifteen

please explain answer if possible

Solution Summary

Two multiple choice questions dealing with Purchasing power, Differential compounding rate are answered.