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8 . Interest, inflation, and purchasing power Suppose Amy is an avid reader and buys only comic books. Amy deposits $2,000 in a bank account

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8 . Interest, inflation, and purchasing power Suppose Amy is an avid reader and buys only comic books. Amy deposits $2,000 in a bank account that pays an annual nominal interest rate of 15%. Assume this interest rate is fixedthat is, it won't change over time. At the time of her deposit, a comic book is priced at $20.00. Initially, the purchasing power of Amy's $2,000 deposit is: comic books. For each of the annual inflation rates given in the following table, first determine the new price of a comic book, assuming it rises at the rate of ination. Then enter the corresponding purchasing power of Amy's deposit after one year in the first row of the table for each ination rate. Finally, enter the value for the real interest rate at each of the given inflation rates. Hint: Round your answers in the rst row down to the nearest comic book. For example, if you nd that the deposit will cover 20.7 comic books, you would round the purchasing power down to 20 comic books under the assumption that Amy will not buy seven-tenths of a comic book. Annual Inflation Rate 0% 15% 18% Number of Comics Amy Can Purchase after One Year v v v Real Interest Rate \"/0 % % When the rate of inflation is less than the interest rate on Amy's deposit, the purchasing power of her deposit V over the course of the year

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