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Part $1$

In$1975,$ interest rates were

$7\mathrm{.}85\%7\mathrm{.}85\%$

and the rate of inflation was

$12\mathrm{.}30\%12\mathrm{.}30\%$

in the United States. What was the real interest rate in$1975?$ How would the purchasing power of your savings have changed over the$$ year?

$($Note$$:

Be careful not to round any intermediate steps less than six decimal$$ places.$)$

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Part $1$

What was the real interest rate in$1975?$

The real rate of interest in $1975$ was

enter your response here$\%.$

$($Round to two decimal$$ places.$)$

Part $2$

How would the purchasing power of your savings have changed over the$$ year?

The purchasing power over that year did the$$ following:$($Select the best choice$$ below.$)$

lect the best choice$$ below.$)$

A$.$

Increased by $4\mathrm{.}45\%4\mathrm{.}45\%$

B$.$

Increased by $3\mathrm{.}96\%3\mathrm{.}96\%$

C$.$

Declined by $3\mathrm{.}96\%3\mathrm{.}96\%$

D$.$

Declined by $4\mathrm{.}45\%4\mathrm{.}45\%$