1 Inflation and interest Suppose you deposit $100 in an account that promises 10% nominal interest. 1. In the next period, how many dollars do you have? 2. If the price level rises from 1 to 1.05. what is the increase in the goods value in the next period, i.e. what is the increase in value using first period dollars. 3. What is the real interest rate? 4. Show how this relates to the Fisher Equation