Question
14. Suppose you deposit $200 into a bank for 1 year. At the time of your deposit, goods cost $2.50 apiece. A year later, you
14. Suppose you deposit $200 into a bank for 1 year. At the time of your deposit, goods cost $2.50 apiece. A year later, you withdraw your deposit with interest, which totals $215. At that time, the price of goods has fallen to $2.40 a piece a. What was the “real” value of your $200 at the time of your deposit? b. What nominal interest rate did your bank pay you for your deposit? c. What was the rate of inflation over the year that your money was sitting in the bank? d. What real interest rate did you earn on your deposit?
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South-Western Federal Taxation 2020 Comprehensive
Authors: David M. Maloney, William A. Raabe, James C. Young, Annette Nellen, William H. Hoffman
43rd Edition
357109147, 978-0357109144
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