Answer
You earn 5 percent interest on funds in your money –market account. If consumer prices increase by 7 percent per year, your earnings on 1,000 in the money-market account is $-20 per year.
Work Step by Step
To figure out your earning, you would subtract the increase in consumer price (7%) by the interest in your account (5%)
5% interest-7% consumer price = -2%
Then you multiply that percent by the amount of money in the money market account (1000)
1000 x -.02 = -20.00
