Nominal and real rates Tyra loves to shop at Dollar Barrel, where she can find many items priced at exactly $1. Tyra has $200 to spend and is thinking of going on a shopping spree at Dollar Barrel, but she is also thinking of investing her money. (Ignore all sales and income taxes.) a. Suppose the expected rate of inflation is 1% (so next year, everything at Dollar Barrel will cost $1.01 ) and Tyra can earn 5% on investments. Approximately what real rate of interest could Tyra earn if she invests her money? How many items can she buy at Dollar Barrel today, and how many can she buy a year from now if she invests today and goes shopping later? What is the percentage increase in Tyra's purchasing power if she waits a year to shop? Compare your answer to the approximate real rate of interest on Tyra's investment. b. Now suppose that the expected inflation rate is 10% and Tyra can earn 20% on money that she invests over the year. What is the approximate real rate of interest that Tyra will earn? Calculate the number of items that Tyra could buy next year from Dollar Barrel if she invests her money. What is the percentage increase in her purchasing power if she waits a year to go shopping? Relate your answer back to Tyra's real rate of return. a. The real rate of interest that Tyra could earn if she invests her money, approximately, is \%. (Round to the nearest whole percent.)