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, _, s 5. Interest, inflation, and purchasing power Suppose Latasha is an avid reader and buys only mystery novels. Latasha deposits $2,000 in a

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, _, s 5. Interest, inflation, and purchasing power Suppose Latasha is an avid reader and buys only mystery novels. Latasha 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 mystery novel is priced at $20.00. Initially, the purchasing power of Latasha's $2,000 deposit is C] mystery novels. For each of the annual ination rates given in the following table, first determine the new price of a mystery novel, assuming it rises at the rate of ination. Then enter the corresponding purchasing power of Latasha'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 first row down to the nearest mystery novel. For example, if you find that the deposit will cover 20.7 mystery novels, you would round the purchasing power down to 20 mystery novels under the assumption that Latasha will not buy seventenths of a mystery noveL Annual Inflation Rate 0 all 1 50/9 1 8 l7/0 Number of Novels Latasha Can Purchase after One Year Y Y 17 Real Interest Rate [_J When the rate of inflation is equal to the interest rate on Latasha's deposit, the purchasing power of her deposit V over the course of the year

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