2
QuizMultiple Choice

Inflation, Interest Rates, and Investment Decisions — Quiz

Question 2 • Personal Finance

Which strategy best protects purchasing power during inflation?

Answer
A
Using a low-interest account
B
Choosing investments with higher returns
C
Avoiding all investments
D
Holding cash

Explanation

Inflation raises prices, so money needs to grow at a rate that keeps pace with rising costs to preserve its purchasing power. Choosing investments with higher returns can help achieve that, though returns are not guaranteed. A low-interest account or holding cash may lose purchasing power when prices rise faster than the money earns.

AI-written and checked against the verified answer.

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